According to Indian media reports on Monday (December 25th), citing unnamed sources, Reliance Industries, India's highest market value company, has signed a non binding investment intention letter with Walt Disney to merge its media business in India.
According to the merger agreement, Reliance will hold 51% of the shares through a combination of stocks and cash, while Disney will hold the remaining 49%, meaning more control will be handed over to Reliance Group under Indian billionaire Mukesh Ambani.
The transaction may be completed before February next year and currently requires approval from regulatory authorities. And the goal of Reliance Group is to complete the original merger by the end of January**
Previously, there were reports that executives from the two companies were holding a meeting in London to discuss the next stage of media mergers.
The proposed transaction will establish a subsidiary under Viacom18, a subsidiary of Reliance Group, to include Disney's Star India through a stock swap.
Viacom18 is a media and entertainment division under the Reliance Group, operating many television channels and JioCinema streaming applications.
Previously, Xinshi had a competitive relationship with Disney. This year, Xinshi obtained the streaming rights for the Indian Cricket Super League, and the digital copyright of the tournament used to belong to Disney's Indian business. This has led to a significant loss of users for Disney's streaming application Hotstar, and in fact, since the beginning of this year, Disney has been exploring the sale or joint venture of its Indian business.
The merger of the two sides is expected to create one of India's largest entertainment empires, aiming to compete with television giants such as Sony and India's largest online television platform Zee Entertainment, as well as streaming giants such as Netflix and Amazon Prime.
In addition to equity structure, the two companies are also discussing a capital injection plan, expected to be between $1 billion and $1.5 billion, but there is no specific indication of whether this is the total investment or the amount each will invest. This fund will be used to support the business development and expansion of the new entity, further consolidating its position in the entertainment industry in India.
The report states that the board of directors is expected to include an equal number of directors from both Reliance and Disney, with each company having at least two representatives. The report states that they are still considering establishing at least two independent directors, but this situation may change in the coming weeks.