|
It
came as a bolt out of the blue. Zee Telefilms and ETC Networks
this morning informed the Bombay Stock Exchange that they
have signed a memorandum of understanding to buy out the
major chunk of the promoters' - Yogesh Radhakrishnan, Yogesh
Shah and Jagjit Singh Kohli - stake. The amount: Rs 178.40
million, for 5.66 million equity shares, which represents
48.38 per cent of the issued and paid up share capital of
ETC.
At this level the pricing per share works out to around
Rs 31 per share. The ETC share closed at Rs 34.50 on Friday
on the BSE.
ETC
Networks, runs the ETC Punjabi and the ETC music Channels
and the company's promoters view the arrangement as a strategic
investment by Zee Telefilms.
Subject
to the necessary corporate and regulatory approvals, Zee
and ETC informed the BSE that the former also intends to
subscribe to additional ETC equity shares of a total value
of Rs 70 million at a price to be determined by the market
regulator Securities and Exchange Board of India ( SEBI)
guidelines on a preferential basis.
ETC
Networks informed the BSE that its board will meet on 25
February to consider, inter alia, the MoU and offer of Equity
Shares on Preferential basis.
Meanwhile,
a press release issued by ETC says both the companies are
currently seeking regulatory approvals. Zee will be making
an open offer in accordance with Sebi guidelines.
Zee
is also planning to acquire additional stake in ETC through
preferential allotment. On completion of both the transactions,
Zee is going to be the majority shareholder in ETC with
approximately 56 per cent stake.
Deal
Size: Approximately Rs. 250 millions
Price:
Approximately Rs 180 mn for purchase of shares from
promoters. Approximately Rs. 70mn for preferential allotment.
Financing: in Cash
Benefits to ETC:
Leveraging on common sales and marketing opportunities
both in India and overseas.
Instead of being a standalone Broadcaster, ETC would
be a part of a strong, 17 channel, Zee Turner bouquet.
Common apparatus for negotiations with music and movie
industry.
Zee will provide its global platform to ETC for carrying
the exclusive Live broadcast of Gurbani from Golden
Temple, Amritsar through its overseas channels
Zee Records will help ETC publish the Gurbani in both
audio and video medium.
Improvement in operational performance through better
network synergies and reduction of overheads.
Benefits to Zee:
Undisputed market leadership in Music and Punjabi segments.
Access to ETC's library of film's rights (Zee Cinema
already has rights to 3,000 movie titles.)
Additional pay revenues by making both the channels
pay as part of the Zee Turner bouquet of 17 channels.
Exploiting synergies between Zee Records and ETC Music,
including exclusive rights to publish audio and DVDs
of Golden Temple Gurbani. |
ETC
has been advised by SSKI Corporate Finance Limited on this
transaction.
Commenting
on the announcement Jagjit Singh Kohli, promoter and managing
director, ETC Networks Ltd. said: "ETC brands have been
nurtured to bring it to a leading position both in music
and Punjabi segment. As part of the Zee Network, we will
have tremendous opportunities to build synergies. Zee's
international presence provides ETC a window to global audiences,
which hitherto was not available."
Sandeep Goyal, Group Broadcasting CEO of Zee Telefilms said
today: "This strategic acquisition is another step in Zee's
plan to achieve world leadership in key content segments
serving the South Asian diaspora. It puts us in an extremely
competitive position in the Music and Punjabi segments and
is a foundation for building more value-creation opportunities.
Management
: The day-to-day operations of ETC will continue to
be managed by the existing management team headed by Jagjit
Singh Kohli. The management team consisting of all three
executive directors will continue with the day-to-day operations
of the company.
Synergies
: As a result of this transaction, the companies believe
there will be improved content offerings, which will drive
viewership and subscriber fees. Zee will bring its strength
in sales and marketing to the Punjabi and music channels
and provide a global platform for ETC content, especially
for the Gurbani rights.
Time
it will take for Zee to complete transaction : Since
Zee intends to acquire more than 15 per cent shareholding
in ETC, Zee will be making an open offer to all shareholders
of ETC in accordance with Sebi guidelines. The entire process
is expected to be complete in approximately three months
after taking all regulatory approvals.
Click
here for more headlines
|
