Bharti Airtel on Wednesday said it will buy back 20 per cent stake in its DTH arm Bharti Telemedia from Warbug Pincus affiliate entity Lion Meadow Investment Ltd for a total consideration of Rs 3,126 crore.
For the acquisition, the company will issue 3.64 crore equity shares of Airtel on a preferential basis to Lion Meadow at a price of Rs 600 per share, Airtel said in a release.
"The remaining consideration of Rs 937.8 crore shall be paid in cash on the closing date of the proposed transaction. There may also be minor customary closing adjustments not exceeding Rs 100 crore," it said.
The shares to Lion Meadow will be issued at a premium of about 0.50 per cent to the floor price determined as per the regulations. The issuance of shares proposed through preferential allotment is subject to shareholders' approval.
The proposed transaction is part of Airtel's strategy to align the shareholding of its customer facing products, services and businesses under the same holding group. A full control and ownership over Bharti Telemedia will allow Airtel to offer differentiated and converged solutions to customers so as to promote 'One Home' strategy.
Bharti Telemedia had a turnover of Rs 2,923.8 crore as on March 31, 2020. Its principal activities consist of setting up, operating and maintaining Direct-to-Home (DTH) cable through digital and any other mode of broadcasting service and includes broadcasting of interactive and personalised content within India.
"DTH is an integral part of our Homes strategy and this transaction is another step towards simplifying the shareholding of our customer facing businesses providing structural flexibility and ease of implementation. Airtel has always enjoyed a close and strategic partnership with Warburg Pincus, across its business verticals and geographies and we are delighted to have them back as part of Airtel's exciting journey ahead, including in digital businesses," Bharti Enterprises Group Director Harjeet Kohli said.
Lion Meadow had agreed to acquire 20 per cent equity stake in Bharti Telemedia in December 2017.
Warburg Pincus India Managing Director and Head Vishal Mahadevia said, "Airtel was one of the earliest and most profitable investments for Warburg Pincus in India. We are delighted to be back as partners in Bharti Airtel through this transaction. We look forward to capitalising on the broad-based growth that the company is witnessing across its entire portfolio of businesses, including the digital build-outs."
In another statement, Airtel said its board has constituted a 'Special Committee of Directors' to consider and evaluate in detail, various options (or combination thereof) for reorganisation of businesses and shareholding structure of the company and its various subsidiaries to achieve required flexibility and sharper focus on digital and non-telecom businesses of the company to enable any unlocking of enhanced value for its stakeholders.
"The Special Committee shall place its suitable recommendations to the board for consideration and/or approval," it said.