UTV’s deal with the Walt Disney Company will trigger an open offer under Sebi guidelines for a further 20% stake at Rs860 per share.
If successful, move will push up its stake to 52.1%, while that of the promoters stays at 32.1%
MUMBAI: UTV’s deal with the Walt Disney Company will trigger an open offer under Sebi guidelines for a further 20% stake at Rs860 per share.
But, though Disney could hold a 52.1% stake following the open offer, this may not lead to a loss of control for Ronnie Screwvala and his promoter companies as the additional 20% would not bring voting rights with it.
Also, over a four-year period, the UTV promoters have the option of buying back all or part of the shares Disney gains through the open offer.
Disney is pumping in $203 million into the company to pick up fresh shares, taking its overall holding in the Mumbai-based entertainment company to 32.1%. The California-based media giant was earlier holding 14.85% in UTV.
The price for the deal has been arrived through a Sebi preferential allotment pricing formula, which averages the trading average over the last 14 days with a 5% premium.
Ronnie Screwvala said, “We do not expect the open offer to be taken up by our shareholders at this time when the company is poised for growth.”
The stake of the promoter group led by Ronnie Screwvala would also be at 32.1%, after the issue of warrants convertible to shares to a promoter Unilazer Exports and Management Consultants at the same rate of Rs860.79 as Disney.
The UTV board will also be reconstituted with 3 members each for the promoters and Disney, along with 6 independent directors.
Disney is also investing Rs120 crore for a 15% stake in UTV Global Broadcasting venture, which is in the midst of launching several television channels. This investment would give the venture a valuation of around Rs.800 crore.
Merrill Lynch was the advisor to the companies for the deals, which at a total size of Rs1,330 crore, is one of the biggest in the Indian media and entertainment space.
The markets were not too enthused by the deal and the UTV scrip fell nearly 4% to 828.25 at close of trade in the Bombay Stock Exchange.
UTV would be using the extra money to grow its businesses across four verticals — content creation, gaming, broadcasting and movie production. Ronnie Screwvala said,
“The money raised would be now used to take care of current funding needs across our businesses. We haven’t worked out the exact details of this.”
He also indicated that a decision on the partner for its business news foray would also be taken soon and that talks are on with two potential partners. Interestingly the Disney deal makes sense for its television business news foray as Disney owns American Broadcasting Corporation, which it had acquired in 1996.
The Walt Disney Company is now present in India through three ventures. ESPNStar in sports broadcasting, Disney branded channels in Kids genre as well as through UTV.
The company had sold Hungama, its maiden foray into broadcasting, to Walt Disney for $30.5mn in 2006.
n_john@dnaindia.net
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