SUMMARY
Viacom18 is poised to become the largest individual shareholder in the merged entity, potentially holding a stake of 42-45%
The parent company RIL is anticipated to inject up to $1.5 Bn in cash into the newly formed entity
Jio Cinema, which falls under the umbrella of Viacom18, will be included as part of the deal
Walt Disney Co and Reliance Industries (RIL) are in the final leg to finalise their mega stock-and-cash merger, which would establish India’s largest media and entertainment business.
With the exclusivity period deadline for negotiations set to end on February 17, the two companies have intensified efforts to forge the details of the deal, ET reported.
According to the terms being discussed, Viacom18 is poised to become the largest individual shareholder in the merged entity, potentially holding a stake of 42-45%.
The parent company RIL is anticipated to inject up to $1.5 Bn in cash into the newly formed entity and also acquire a direct stake. As a conglomerate, the Mukesh Ambani-led RIL group is projected to hold a 60% ownership, while Walt Disney will retain the remaining 40%.
Reliance executives are concurrently developing a three-year capital allocation plan encompassing all their businesses, slated to be presented to the board imminently. Among these plans, the media business is highlighted as a pivotal component of their growth strategy.
As it stands, the current proposal involves establishing a step-down subsidiary of Viacom18 Media, which will incorporate Star India through a stock swap arrangement, the report said.
Both entities are being assessed as comparable in size, each valued between $4-5 Bn. Consequently, RIL is expected to provide cash payment for the controlling stake in this arrangement.
Jio Cinema, which falls under the umbrella of Viacom18, will be included as part of the deal.
“The Big 4 firms, who are doing the diligence from both sides, along with the multiple law firms engaged and company executives, are working against time to give the finishing touches (to the deal),” said a company executive, as quoted in the report.
Earlier in December, the two companies signed non-binding term sheet in London. The merger was expected to be completed by February post regulatory approvals.
Walt Disney Co acquired the entertainment assets of 21st Century Fox in 2019 for a whopping $7.1 Bn. Post the acquisition, Hotstar, a wholly owned subsidiary of Star India, was rebranded as Disney+Hotstar. At the time of acquisition Star India was one of the major cash cows for 21st Century Fox.
Lately, Disney in India has faced challenges following its loss of streaming rights for the Indian Premier League (IPL) in 2022, which were secured by Viacom18 for a staggering $6.2 Bn for the 2023-2027 period.
