Reliance Industries is in advance negotiations to buy Just Dial (JD) from its founding promoters in a USD 800- 900 million transaction, said multiple sources aware. According to media reports, the transaction, once successful, will help, Reliance Retail leverage the merchant database of the 25-year old information search and listings company as well as its pan India network, to further accelerate its own local commerce and payments play.

Justdial is a local search engine segment that has nearly 150 million average quarterly unique visitors across multiple platforms like mobile, apps, website and 8888888888 telephone hotline. The company has called for a board meeting on Friday July 16 to “evaluate” fund raising proposals. A formal announcement is expected on that day.

Details of the Deal –

Reliance is planning to buy partially from managing director VSS Mani and family, who control 35.5 per cent of the company which currently is valued at Rs 2387.9 crore, state media reports. This would trigger an an open offer for an additional 26 per cent of the company’s equity which at current prices could lead to a Rs 4102 crore pay out, at current share prices. If the open offer is fully subscribed to, Reliance will end up with over 60% stake with Mani staying on as a junior partner to run the operations and ride the future upside.

Justdial stocks have gone up 52.4 per cent in the last six months. Market analysts feel this was in anticipation of a deal. Reports suggest that the companies have been in these talks since April, but gathered momentum after sale talks with Tata fell through, earlier this year. Shardul Amarchand Mangaldas and Co, Cyril Amarchand Mangaldas and Goldman Sachs are the advisors in the transaction.

The company innovating for local contexts and doubling down on digitisation…

“Unlike common perception of internet businesses being winner take all, we believe that the B2B marketplace model has room for multiple players with a variety of business models existing in tandem. Justdial’s strength is its sales presence in tier 2 cities (markets excluding its top-11 cities) and traffic. The company capitalised on the rise of middle cities by driving a virtuous cycle of traffic, paid campaigns, realisation and hence revenue. We expect Justdial to aggressively target retail-oriented B2B categories to acquire leads via JD Mart,” Vivekanand Subbaram of Ambit Research said, according to ET.“Mani grew his company frugally, but its service offerings have been patchy unlike the late entrants,” said a rival CEO from an internet firm who did not wished to be quoted. “He was always focused on cash flows and not growth unlike other players. Even though he has a loyal base, the lead generation has become suspect.”

The deal comes after Austria’s Federal Competition Authority demanded eBay cut its holding in Adevinta to no more than 33% to approve their plan to create a world leader in classified ads.