Walt Disney to up stake in UTV to 32%, invest Rs 9.2 billion in full deal

MUMBAI: The Walt Disney Company is lifting its stake in UTV Software Communications to 32.1 per cent through a preferential allotment.

Disney is also investing Rs 1.19 billion ($30 million) in UTV Global Broadcasting Ltd (UGBL) for a 15 per cent stake, sources say. This puts the enterprise value of the broadcasting business at Rs 7.93 billion.

In UTV Software, sources add, Disney will be investing Rs 8.05 billion ($203 million) which will also give the media conglomerate a presence in the motion pictures business. UTV Software Communications holds 77 per cent in UTV Motion Pictures, a listed entity in the Alternative Investment Market (AIM) of the London Stock Exchange.

In an earlier combined deal, Disney had taken a 14.9 per cent stake in UTV while buying out kids-entertainment channel Hungama from founder-promoter Ronnie Screwvala.

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UTV promoter group will invest Rs 3.9 billion ($98 million) to keep its shareholding at 32.1 per cent, similar to what Disney will have. This will be through fresh issue of warrants. The founders of UTV Software Communications now hold 30.67 per cent in the company.

Disney will have to make an open offer for a further 20 per cent which means its stake in UTV Software Communications could go up to 52.1 per cent. Indian takeover rules make open offer mandatory for companies whose holding rises above 15 per cent.

The open offer will be at Rs 860.79 per share, according to sources. UTV shares closed 

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The broadcasting business will also see fresh capital infusion. UTV will invest Rs 2.40 billion ($ 60 million) for a 75 per cent stake in UGBL, sources say. The promoter group will hold the balance 10 per cent. UGBL is the parent company for its two wholly owned subsidiaries, Genx Entertainment Limited (Genx) and UTV Entertainment Television Limited (UETL).

Genx has launched two youth entertainment channels under the brand name of Bindass. UETL has recently launched World Movies channel and is soon to come out with UTV Movies, a Hindi movie channel.

The total capital infusion will be Rs 13.14 billion. This will include the investment by Disney in UTV and UGBL along with investments in UTV from promoter group.

Disney will make the investments through its subsidiary, The Walt Disney Company (South East Asia) Pte Ltd, sources say. The deal will strengthen Disney’s presence in India across movies, TV content, gaming and broadcasting.

Screwvala will have the optiion of retaining management control of UTV and will continue to remain CMD for two consecutive terms of five years each.

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