Arkade Developers Limited has informed the Exchange about Acquistions
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Arkade Developers' board has approved acquiring 100% of Filmistan Private Limited (FPL) for a cash consideration of Rs. 182.95 crore through a Share Purchase Agreement, making FPL a wholly owned subsidiary. FPL is in the film production, distribution and exhibition business, with a turnover of just Rs. 18.87 lakhs and networth of Rs. 5.54 lakhs as of March 2024. The deal is not a related party transaction, requires no regulatory approvals, and is expected to close within a month. The company says the acquisition will help expand its real estate business, though FPL itself is a film industry entity. The acquisition cost of Rs. 182.95 crore is significantly higher than FPL's networth and turnover, raising questions about the strategic rationale and valuation.
Shareholders may be concerned about the high valuation paid for a film company with minimal revenue, especially given the stated real estate rationale. The deal will consume significant cash reserves and may be viewed negatively by the market until more clarity on the strategic fit emerges.