Ireland’s Independent News and Media (INM), sold a 7.3% stake in Jagran Prakashan Ltd (JPL) in a series of bulk deals yesterday and today. JPL CFO R.K. Agarwal said the company has authorized INM to sell upto 22 million shares, amounting to 7% stake in the publisher of Dainik Jagran, India’s most read daily.

As per the shareholders’ agreement, JPL has the first right of refusal should INM decide to sell. While the companies did not do a private deal, Agarwal said the company was buying as much stock from the open market as possible without triggering an open offer. “I have authorized my people to buy upto 5%—that is the most we can buy under the restrictions of the takeover code,” Agarwal said. “Exactly how much we ended up buying, I’ll know only tomorrow,” Agarwal said.

The promoter group—Jagran’s Gupta family—held 59.25% prior to the current transaction. (In the picture L-R: JPL CMD Mahendra Mohan Gupta and CEO Sanjay Gupta) 

INM, which publishes The Independent, among others, acquired a 26% stake in JPL in 2005 at Rs467 per share. It got diluted to 20.8% after JPL’s initial public offering in 2006. Today, INM sold at Rs67.39. However, INM subsequently received bonus shares in JPL, adjusting for which, the effective price of acquisition becomes Rs143.7. In addition to this, JPL also undertook a stock split, which means while the face value of the shares was Rs10 at the time of acquisition, the face value of the same shares now is Rs2. INM also received dividends all these years from the profit-making JPL. The Jagran scrip closed at Rs71.15, down 3.46% on the Bombay stock Exchange. The benchmark Sensex closed marginally up.

“This sale represents approximately 7.3% of the issued share capital of JPL and reduces INM’s holding in JPL to 13.5% (previously 20.8%). Having originally invested €28.5 million to acquire its stake in 2005, following this share sale, INM’s remaining holding in JPL is worth c. €42 million at current market price,” INM said in a statement. “The gross proceeds from this share sale is approximately €22 million, which will be used to pay down debt and enhance the liquidity of the Company…,” it added.

Agarwal said there would be no change in the relationship between the two partners following the dilution. “They have some difficulties, they wanted to dilute and we agreed,” Agarwal said. INM’s financial difficulties have been known for a while now and at least one Irish Newspaper reported late last month that the company was facing bankruptcy.

Agarwal said there would be no change in the number of board seats enjoyed by INM. Currently the JPL board consists of 18 members, of which, two are from INM, seven from the Gupta family and nine independent directors. “We won’t ask them to vacate a seat. Their contribution is too valuable,” he said.

“The Company is happy to confirm that it intends to remain a long-term investor in JPL and will not be disposing of any further shares,” INM said. 

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