In a bid to reshape India’s media and entertainment landscape, Walt Disney Co and Reliance Industries (RIL) are on the brink of finalizing a monumental stock-and-cash merger. This merger, poised to establish the country’s largest media conglomerate, is reaching its conclusive stages as the deadline for exclusivity period negotiations approaches on February 17, as reported by ET.
Under the terms currently under discussion, Viacom18 is set to emerge as the largest individual shareholder in the merged entity, potentially commanding a stake of 42-45%. The parent company RIL is expected to infuse up to $1.5 billion in cash into the newly formed entity, also acquiring a direct stake. The conglomerate, led by Mukesh Ambani, is projected to hold a 60% ownership, with Walt Disney retaining the remaining 40%.
Concurrently, Reliance executives are formulating a comprehensive three-year capital allocation plan encompassing all their business ventures, with the media sector highlighted as a pivotal component of their growth strategy.
As part of the proposed deal, a step-down subsidiary of Viacom18 Media will be established, incorporating Star India through a stock swap arrangement. Both entities are being valued between $4-5 billion, with RIL expected to provide cash payment for the controlling stake in this arrangement.
Jio Cinema, a subsidiary of Viacom18, is also slated to be included in the merger.
“The Big 4 firms, who are conducting diligence from both sides, along with multiple law firms and company executives, are racing against time to finalize the deal,” said a company executive quoted in the report.
Previously, in December, the two entities signed a non-binding term sheet in London, with the merger anticipated to conclude by February pending regulatory approvals.
Disney’s acquisition of 21st Century Fox’s entertainment assets in 2019 for $7.1 billion paved the way for further consolidation in India’s media landscape. Post-acquisition, Hotstar, a wholly-owned subsidiary of Star India, was rebranded as Disney+Hotstar. Star India was a significant revenue driver for 21st Century Fox at the time of acquisition.
However, Disney has faced challenges in India following the loss of streaming rights for the Indian Premier League (IPL) in 2022, secured by Viacom18 for a staggering $6.2 billion for the 2023-2027 period.
The impending merger signals a strategic move by both companies to fortify their positions in India’s ever-evolving media and entertainment sector, setting the stage for potential industry-shifting developments in the near future.
