Birla’s stake in Living Media approved

In its order,dated August 14 and made public today,CCI observed that both Aditya Birla group and India Today Group are engaged in the retail business,but the transaction “is not likely to have an appreciable adverse effect on competition in India”,and therefore it has approved the deal.

The CCI said it received an application for its approval to the deal on June 18,after which it had sought certain information and documents from IGH Holdings.

The proposed transaction involves an initial acquisition of 24.9 per cent stake in Living Media India by IGH and an additional purchase of 2.6 per cent stake,resulting into a total purchase of 27.5 per cent equity.

The companies said in their applications to CCI that the said purchase of shares of Living Media by IGH may go up to a maximum of 49 per cent,and the proposed acquisitions and valuation adjustments should be completed within six months from the end of the financial year 2015-16.

As per the CCI order,the companies had further said that the initial purchase of 24.9 per cent stake and the subsequent acquisitions,including the purchases due to valuation adjustments,are inter-related and inter-dependent and the CCI approval has been sought for the proposed acquisition of equity shareholding of up to 49 per cent of Living Media by IGH Holdings.

As per the details provided by the companies to CCI,there are certain conditions precedent in the share subscription and purchase agreement (SSPA) which related to certain transfer to and from Living Media,pursuant to which some businesses of Living Media,including Thomson Press (India),its subsidiaries and some other businesses would be hived off.

After such transfers,the subsidiaries and associate firms of Livin Media would include TV Today Network,ITAS Media,Today Retail Network,Today Merchandise,Harper Collins,Mail Today Newspapers,India Today Online,Universal Learn Today,Integrated Databases India and Automotive Exchange Pvt Ltd.

After the transaction,IGH would have certain statutory rights in Living Media,along with the contractual rights of the shareholders agreement.

India Today is involved in diversified businesses,including newspapers,mangazines,directories,publishing,TV and radio broadcasting,music,event management and education.

IGH is an investment company registered with RBI as a non-deposit taking NBFC and its main business is to make and hold investments in the Aditya Birla Group,which has interest in various sectors like metals,cement,textiles,chemicals,mining,telecom,financial services,retail and technology.

Observing that both the Groups are present in retail business,CCI said that retail sector in the country might be broadly categorised into organised and un-organised segments.

The organised retail sector can be further categorised into physical store and non-store segments and the latter includes internet,TV,catalogue and direct selling segments.

CCI said both the India Today Group and Aditya Birla Group are primarily present in the organised retail business.

While India Today Group has presence in physical store retail segment as well as online non-store segment through Media Mart and BagItToday.Com,respectively,the Aditya Birla Group is only present in physical store segment with its ‘More’ megastores and ‘More’ stores.

However,the products being sold by their respective stores indicate that the stores operated by India Today Group operate on a different format as compared to those of Aditya Birla Group,the CCI said.

While Media Mart,the chain of stores operated by India Today Group in Delhi,Mumbai and Chennai,sells only media related products such as books,magazines,newspapers,CDs etc,the Aditya Birla Group operates 479 stores under ‘More Stores’ brand for food and grocery iems and 14 stores under ‘More MegaStores’ brand for a host of products such as grocery,home merchandise,books,magazines,electronics etc.

CCI ruled that the proposed transaction is not likely to have any significant impact on the retail market in India,”considering the retail businesses of the India Today Group and the Aditya Birla Group as well as the category of products sold and total value thereof and the nature,characteristics and dynamics of the retail sector in India.”

It also observed that even vertical relationships between the products and services of the two Groups are not of any significant nature to raise any adverse competition concern.

These relationships include advertisements placed by Aditya Birla Group in various media platforms operated by India Today Group,Aditya Birla Group being in telecom business through Idea Cellular and India Today Group firms providing content for mobile value added services,as also BagItToday.Com being in sale of apparels and Birla Group having presence in textiles business.

Aditya Birla Group recently said it would re-submit its application for CCI approval to another deal involving purchase of majority stake in Pantaloon format retail business from Kishore Biyani-led Future Group,after the fair-trade regulator said its previous application was ‘not valid’.