This story first appeared in DNA Money edition on Wednesday July 27, 2011.
Walt Disney is set to acquire a significant majority in UTV Software Communications Ltd, with the intention of delisting it.
Walt Disney Company (South East Asia) Pte Ltd, a subsidiary company, will buy out public shareholders and other promoter holdings (RS Promoters) in UTV for around Rs2,013 crore.
In a filing to the Bombay Stock Exchange (BSE), UTV Software said it has received a proposal from Walt Disney (a promoter of the company) to delist equity shares of the company from the stock exchanges. The board of directors of the acquirer has approved the delisting offer and decided that shares held by public shareholders will be acquired at Rs1,000 per equity share.
Shares of UTV Software closed at Rs950.45 apiece on Monday, up 5.39%, on a day the broader market tanked 1.87%.
Analysts tracking the Indian media and entertainment sector feel the deal is at a 20% premium to Zee Entertainment’s FY12E earnings per share (EPS).
“In the last one year, UTV has traded at a discount to its peers, but has seen a significant run up in the past few months in anticipation of the deal. At Rs1,000, the deal will be done at price-earnings (PE) of 30x FY11 EPS and PE of 25x FY12E EPS, which is a sharp premium to its last three years average PE. It is also at a premium to the leading broadcaster Zee Entertainment which trades at around 22x FY11 EPS and 21x FY12E EPS,” said Rahul Kundnani, analyst, SBICAP Securities.
Disney currently owns 50.44% —- acquired in separate tranches during 2008 —- in UTV Software. It is the first Hollywood studio to have majority shares in an Indian entertainment company.
UTV founders Ronnie Screwvala, Zarina Mehta and various companies held by them (termed RS Promoters) own 19.82% of the current paid-up equity share capital, taking the aggregate promoter holding in the company to 70.26%. The balance 29.74% is in the public domain.
“Such a delisting of a public company in India is a long process and is subject not only to various regulatory approvals but also to a shareholder vote and a reverse book building process, all of which can take several months or more to complete. Given the multiple stages and the nature of the process, a successful outcome is uncertain,” Walt Disney said in an official statement.
In the event Disney is able to successfully acquire sufficient outstanding shares of UTV to delist, Screwvala, the current CEO of UTV, will also sell his shares to Disney and become the managing director of The Walt Disney Company India. “Mahesh Samat, currently managing Disney’s assets in India, will become chief operating officer, reporting to Screwvala,” Disney said in the statement. However, if the delisting is unsuccessful, Disney will consider its full range of strategic options.
Walt Disney is set to acquire a significant majority in UTV Software Communications Ltd, with the intention of delisting it.
Walt Disney Company (South East Asia) Pte Ltd, a subsidiary company, will buy out public shareholders and other promoter holdings (RS Promoters) in UTV for around Rs2,013 crore.
In a filing to the Bombay Stock Exchange (BSE), UTV Software said it has received a proposal from Walt Disney (a promoter of the company) to delist equity shares of the company from the stock exchanges. The board of directors of the acquirer has approved the delisting offer and decided that shares held by public shareholders will be acquired at Rs1,000 per equity share.
Shares of UTV Software closed at Rs950.45 apiece on Monday, up 5.39%, on a day the broader market tanked 1.87%.
Analysts tracking the Indian media and entertainment sector feel the deal is at a 20% premium to Zee Entertainment’s FY12E earnings per share (EPS).
“In the last one year, UTV has traded at a discount to its peers, but has seen a significant run up in the past few months in anticipation of the deal. At Rs1,000, the deal will be done at price-earnings (PE) of 30x FY11 EPS and PE of 25x FY12E EPS, which is a sharp premium to its last three years average PE. It is also at a premium to the leading broadcaster Zee Entertainment which trades at around 22x FY11 EPS and 21x FY12E EPS,” said Rahul Kundnani, analyst, SBICAP Securities.
Disney currently owns 50.44% —- acquired in separate tranches during 2008 —- in UTV Software. It is the first Hollywood studio to have majority shares in an Indian entertainment company.
UTV founders Ronnie Screwvala, Zarina Mehta and various companies held by them (termed RS Promoters) own 19.82% of the current paid-up equity share capital, taking the aggregate promoter holding in the company to 70.26%. The balance 29.74% is in the public domain.
“Such a delisting of a public company in India is a long process and is subject not only to various regulatory approvals but also to a shareholder vote and a reverse book building process, all of which can take several months or more to complete. Given the multiple stages and the nature of the process, a successful outcome is uncertain,” Walt Disney said in an official statement.
In the event Disney is able to successfully acquire sufficient outstanding shares of UTV to delist, Screwvala, the current CEO of UTV, will also sell his shares to Disney and become the managing director of The Walt Disney Company India. “Mahesh Samat, currently managing Disney’s assets in India, will become chief operating officer, reporting to Screwvala,” Disney said in the statement. However, if the delisting is unsuccessful, Disney will consider its full range of strategic options.
No comments:
Post a Comment