Walt Disney Co and Reliance Industries (RIL) are in the final round of talks to seal the Reliance-Disney merger, intending to establish India’s largest media and entertainment business. The exclusivity period deadline for the Reliance-Disney merger negotiations is set for February 17, so the two companies have intensified efforts to forge the deal’s details.
A source mentioned in the ET report added that Viacom18 is poised to emerge as the primary shareholder, potentially holding a 42-45 per cent stake in the merged entity. According to the report, February 17 marks the exclusivity period deadline to conclude the bilateral Reliance- Disney Merger, and RIL plans to inject up to $1.5 billion cash into the proposed venture.
Reliance-Disney Merger Talks and Strategic Initiatives Overview
In the final stages of negotiations, Reliance Industries (RIL) and Walt Disney Co. are poised to seal a substantial stock-and-cash merger, aiming to establish India’s largest media and entertainment entity. RIL, the parent company, plans to inject up to $1.5 billion in cash into the venture, securing a direct ownership stake and maintaining a majority share of 60 per cent. Meanwhile, Walt Disney is anticipated to retain the remaining 40 per cent. RIL executives are formulating a comprehensive three-year capital allocation strategy alongside these discussions, emphasizing the media division’s role in future growth initiatives.
The proposed deal involves establishing a subsidiary of Viacom18 Media to absorb Star India through a stock exchange agreement, valuing both entities at an estimated $4-5 billion each. Additionally, Jio Cinema, a component of Viacom18, is expected to be integrated into the merger. Analysts attribute Disney’s declining valuation of its Indian operations to mounting losses, particularly within its sports franchise, notably in anticipation of the ICC Men’s Cricket World Cup 2023 in India.
Disney+Hotstar Surges in Paid Subscribers Despite IPL Setback
Despite a setback with the loss of digital rights to the Indian Premier League (IPL), Disney+Hotstar, the company’s video-streaming platform, recently experienced a surge in paid subscribers following a period of decline. Disney CEO Bob Iger expressed optimism regarding the company’s trajectory, citing recent earnings results as evidence of a promising shift. However, Disney has been involved in proxy battles with investors seeking changes to boost shareholder value.
Amid these challenges, the company’s stock witnessed a notable 11.5 per cent surge on February 8, reaching a one-year high driven by better-than-expected financial performance and shareholder-friendly initiatives. Disney’s strategic investments, including a $1.5-billion partnership with Epic Games, signal its intent to expand into the evolving gaming sector.
As negotiations between Disney and RIL conclude, stakeholders anticipate forming a board-managed company, with RIL holding a majority share.