Reliance-Disney merger update: Reliance Industries Limited (RIL) and Walt Disney are in the final stage of negotiations to finalise their merger. This potential new entity is set to be India’s largest media and entertainment business. The exclusivity period deadline for bilateral negotiations comes to an end on February 17.
RIL is expected to invest up to $1.5 billion cash in the new entity
Reliance-Disney merger news: Mukesh Ambani-led Reliance Industries Limited (RIL) and Walt Disney are in the last leg of negotiations to finalise their mega stock-and-cash merger to create India’s largest media and entertainment business, as per an Economic Times (ET) report. The exclusivity period deadline for bilateral negotiations comes to an end on February 17.
With 42-45% in the combined entity, Viacom18 is set to become the single largest shareholder.
The parent company, RIL, plans to inject up to $1.5 billion in cash into the new entity and acquire a direct stake. RIL group as a whole will hold a 60% ownership stake, while Walt Disney will own the remaining 40%.
According the the ET report, Reliance executives are currently developing a three-year capital allocation programme for all business sectors, which will soon be presented to the board. The media business is expected to play a crucial role in the company’s growth plan.
As of now, the proposal is to establish a step-down subsidiary of Viacom18 Media, which will merge with Star India through a stock swap, insiders revealed to ET. Both entities are being regarded as similarly sized, valued at approximately $4-5 billion each. So, RIL will use cash to acquire the controlling stake.
Jio Cinema, a division of Viacom18, will be integrated into the deal. Disney’s valuation of its India business has sharply declined since its acquisition in 2019, largely due to the increasing losses incured by Disney’s sports franchise in India, analysts told ET.
Viacom18’s entertainment network in India is a collaboration between Ambani’s TV18 Broadcast, Paramount Global, and Bodhi Tree Systems.
Bodhi Tree Systems, established by James Murdoch and former Disney India chief Uday Shankar, is an investment fund. As a stakeholder in Viacom18, Bodhi Tree will indirectly hold shares in the new entity, contrary to some reports, the company executives involved told ET.
“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),” a company executive told ET. “They can extend the deadline mutually if they wish to, but both sides have the support of their top leadership to iron out all differences, if any, and wrap things up by the fiscal-end. The Indian media landscape is in a flux, so they want to join forces at the earliest and consolidate,” the executive added.
The new entity’s board is expected to have Disney’s three representatives. The board is expected to be constituted of eight or nine members.
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