Adlabs - Unlocking Value

Adlabs - Announces Demerger Of FM Radio Business

Just think about the valuation of Entertainment Network (Radio Mirchi) and try to evaluate what will be the value of FM Radio business of Adlabs since it has maiximum nuber of licenses. I feel that sum of part valuation will be much higher and standalone business of FM Radio will provide good return to investors over long term.

Anil Ambani controlled Adlab's radio business would be hived off and listed as a separate entity, where each shareholder of the parent company would get two free shares of the new company for every share held by them. The issue came up for discussion at the Board meeting of Reliance Capital, which had last year acquired Adlabs, an RCL release said here.

Stating that the FM radio business would be de-merged into a wholly owned subsidiary (SPV), the company said the scheme envisaged issue of pro-rata shares by the SPV to all shareholders of Adlabs in the ratio of two free shares of the SPV for every one held by them. Further, Reliance Land Pvt Ltd, an affiliate company of Reliance Capital Ltd (RCL) will receive 4,12,00,000 shares of the SPV pursuant to the proposed demerger, it added. The shares of SPV received by RLL are proposed to be distributed free of charge, pro-rata to all shareholders of RCL in the ratio of one share for every six held in RCL, it said. All shareholders of Reliance Capital Venture Ltd (RCVL) presently under the process of merger with RCL, will also receive free shares similarly of the SPV in line with their shareholdings in RCL, it added.

The company, however, said the proposal the scheme was subject to regulatory and shareholders approvals. The demerged company is proposed to be separately listed on the BSE and NSE to provide liquidity to all the shareholders, it added.