What is the logic of Reliance Retail buying a majority stake in Just Dial?
Answer
Answer
The deal was in the works for some time and finally, on the day Just Dial announce relatively tepid quarterly results, Reliance Retail Ventures Ltd announced a majority stake acquisition in Just Dial. You must be aware that Just Dial is a 25 year old internet company located in India offering local search engine services. RRVL will pay a consideration of Rs.5,719 crore for the majority stake in Just Dial, as a logical corollary to its digital foray.
The process of the stake acquisition is quite interesting. RRVL will buy 25.33% worth Rs.1,022 core through the preferential allotment route while another 15.62% stake will be purchased for Rs.1,020 crore from the promoter, VSS Mani. In addition, RRVL will also follow it up with a 25.33% open offer to minority shareholders under SEBI regulations for a consideration of Rs.2,222 crore.
Post the deal and the preferential offer, the promoter stake will come down from 35.32% to 10.7% while the stake of Reliance Retail will go up to 67%. However, it has been decided that Mani and family will continue to be classified as promoters and will continue as the managing director and CEO of the entity. RRVL is already India’s largest retail business and has a much larger omni channel gam plan.