Reliance Industries Limited Wal Disney co media and entertainment merger deal may be announced by January 2024 end

Reliance Industries Ltd (RIL) and Walt Disney Co. are in the final stages of negotiations for merging media and entertainment operations in India, reported The Economic Times.

According to sources quoted in the report, the companies are working on a non-binding term sheet that would pave the way for the consolidation of their operations.

If successful, this deal could position Mukesh Ambani-led RIL as the majority stakeholder in what could become India’s largest media and entertainment business.

The proposed plan involves the creation of a step-down subsidiary of RIL’s Viacom18, absorbing Star India through a stock swap, as per the people quoted in the ET report.

Reliance aims to secure a controlling stake of at least 51 per cent, with Disney holding the remaining 49 per cent. The negotiation also includes a cash injection of $1-1.5 billion as immediate capital investment.

Equal representation

The board structure of the merged entity is expected to have equal representation from Reliance and Disney, with a minimum of two directors each.

Additionally, discussions involve granting a board seat to Bodhi Tree, the second-largest shareholder in Viacom18. Independent directors are also under consideration.

According to the ET report, key individuals involved in the negotiations include Justin Warbrooke and Kevin Mayer from Disney, along with K Madhavan, Disney’s India head.

Reliance’s negotiations are led by Manoj Modi, an essential adviser to Mukesh Ambani.

Merger likely by end of January 2024

The anticipated timeline suggests that both companies may announce the merger by the end of January, following crucial meetings and the signing of the term sheet, the sources quoted in the ET report added.

Confirmatory due diligence and the valuation exercise will follow, with a five-year licence for exclusive subscription video-on-demand (SVOD) content from Disney+ expected to be part of the agreement.

Walt Disney CEO Bob Iger expressed the company’s interest in staying and strengthening its position in India during an earnings call in November.

Analysts suggest that this merger could provide cost and revenue synergies, transforming the value of the combined businesses in the longer term.

Both Viacom18 and Star India have faced challenges in their financial performance, with Viacom18 reporting a significant drop in net profit for FY23, while Star India’s consolidated net profit declined by 31 per cent. The merger is seen as an opportunity to address these challenges and enhance the overall competitiveness of the joint venture.

Published By:

Koustav Das

Published On:

Dec 12, 2023

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