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Disney offers to buy out UTV Software

Disney offers to buy out UTV Software
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First Published: Wed, Jul 27 2011. 12 14 AM IST

Personal stake: If Disney is successful in its delist bid, UTV founder Ronnie Screwvala will sell his shares to the company and become managing director of The Walt Disney Co. (India). Photographs by
Personal stake: If Disney is successful in its delist bid, UTV founder Ronnie Screwvala will sell his shares to the company and become managing director of The Walt Disney Co. (India). Photographs by
Updated: Wed, Jul 27 2011. 12 14 AM IST
Mumbai: The Walt Disney Co. wants to acquire UTV Software Communications Ltd, the Ronnie Screwvala-promoted company that has interests in broadcasting, films, gaming, animation and new media, with the eventual aim of taking it private.
In a notification to the Bombay Stock Exchange on Tuesday, UTV Software Communications Ltd said it had received a proposal from The Walt Disney Co. (South-East Asia) Pte. Ltd to acquire all outstanding equity shares held by public shareholders in the company.
Personal stake: If Disney is successful in its delist bid, UTV founder Ronnie Screwvala will sell his shares to the company and become managing director of The Walt Disney Co. (India). Photographs by Abhijit Bhatlekar/Mint
UTV currently runs television channels such as UTV World Movies, UTV Action in Hindi and Telugu as well as youth entertainment channel UTV Bindass. According to the statement to the Bombay Stock Exchange, Disney holds a 50.44% stake, while about 19.82% is held by Rohington (Ronnie) Screwvala, Unilazer Exports and Management Consultants Ltd, Unilazer (Hong Kong) Ltd and Zarina Mehta, for a total of about 70%.
In its letter, UTV said its board had approved the Disney proposal to eventually de-list the company from the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).
Disney is looking to buy out all other shareholders at a maximum Rs 1,000 per share, potentially valuing the deal at up to Rs 2,013.68 crore. UTV rose 5.39% to Rs 950.45 on Tuesday on the Bombay Stock Exchange after the announcement. The benchmark Sensex fell 1.87% to 18,518.22 points.
A statement from the Walt Disney Co. (India) maintained that the Disney subsidiary has taken the first step to acquire sufficient shares in UTV to “delist” the company.
However, “given the multiple stages and the nature of the process, a successful outcome is uncertain”, the company said.
If Disney is successful in its delist bid, Screwvala, founder and current CEO of UTV, will sell his shares to the company. He will then become managing director of The Walt Disney Co. (India). Mahesh Samat, currently managing Disney’s assets in the country, will become chief operating officer, reporting to Screwvala.
Walt Disney’s acquisition comes at a time when the company is looking to grow substantially in India, said a media analyst who did not want to be named, citing company policy.
“If it comes through, Disney will acquire a strong movie franchise, three-four channels, which are already up and running and doing well and a gaming business that’s yet to show its potential in India,” said the analyst, adding that the delisting offer at a price of Rs 1,000 per equity share, was quite high.
He said UTV’s stock hadn’t been faring too well until talk of Disney buying out the company started doing the rounds some time back. UTV had denied it was in talks to sell to Disney. The stock had risen 12% to a 52-week high on the speculation.
Disney runs television channels for children under Walt Disney Television International (India), a film distribution arm that brings in local and international content through Walt Disney Studios Motion Pictures (India) and merchandise through Walt Disney Consumer Products.
Disney’s move to consolidate its presence in India comes at an opportune time, said two independent media analysts who did not want to be named, citing company policy. India is a growing market with untapped potential in the broadcasting space compared to more mature markets.
“Whether it’s News Corp., Turner, Viacom or Paramount, they have consistently been looking at expanding their presence here,” said one analyst, adding that 100% foreign direct investment in entertainment makes India an attractive market for broadcasters.
“Their intention to buy the Indian promoter’s stake would necessarily increase their voting rights in the company. This would mean that they would have to come out with an open offer and it would then make sense to look at owning 100% stake,” he said.
If for some reason, the delisting is not successful, Disney “will evaluate all potential strategies and opportunities in relation to the acquirer’s (Disney’s) investment in the company”, the company said.
gouri.s@livemint.com
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First Published: Wed, Jul 27 2011. 12 14 AM IST