Bharti Airtel shares gains on acquiring 20% stake in Bharti Telemedia

The company board has approved the acquisition of 102,040,000 shares of Bharti Telemedia from Lion Meadow Investment.

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Bharti Airtel share price rose in the early trade on February 18 after teh telecom major’s board approved the 20 percent stake acquisition of Bharti Telemedia from Lion Meadow Investment.

At a meeting on February 17, 2021, the board approved the acquisition of 102,040,000 shares of Bharti Telemedia by the company from Lion Meadow Investment Ltd, a Warburg Pincus entity, as per the BSE release.

Subject to the approval by shareholders in the extraordinary general meeting and in accordance with the SEBI, the board also approved the issuance of up to 36,469,913 equity shares on a preferential basis to Lion Meadow to substantially discharge consideration against the aforesaid acquisition of equity shares of Telemedia.

The equity shares to be issued to Lion Meadow shall be at a price of Rs 600 per equity share, which is at around 0.50 percent premium to the floor price.

However, the remaining consideration of around Rs 9,378 million shall be paid in cash on the closing date, resulting in total transaction consideration of about Rs 31,260 million.

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, the company said in the release.

A full control and ownership over Bharti Telemedia allows Airtel to offer differentiated and converged solutions to customers so as to promote “One Home” strategy.

“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,” said Harjeet Kohli, Group Director, Bharti Enterprises.

UBS

UBS has maintained a ‘buy’ rating with a target at Rs 665 per share. The reorganisation of DTH & digital assets as focus shifts beyond “connectivity”, while a stake purchase in the DTH arm is a positive strategic move.

The reorganisation of digital business is also a step in the right direction, reported CNBC-TV18.

Morgan Stanley

Research house kept “overweight” rating with a target at Rs 760 per share. According to the firm, for the base case estimates, the Warburg transaction is largely neutral, reported CNBC-TV18.

At 0921 hors, Bharti Airtel was quoting at Rs 596.75, up Rs 2.90, or 0.49 percent, on the BSE.

The share touched its 52-week high Rs 623.00 and 52-week low Rs 381.05 on February 4, 2021 and March 19, 2020, respectively.

It is trading 4.21 percent below its 52-week high and 56.61 percent above its 52-week low.