| MUMBAI:
Mergers are normally expected to deliver the goods. But what about demergers?
The expectation is just about the same. The
Subhash Chandra-promoted Zee Entertainment Enterprises Ltd (Zeel) is expecting
a major boost in its operating profits, with its proposed demerger of regional
general entertainment channels (R-GECs) from Zee News Ltd (ZNL). Zeel,
which at present holds the non news and non regional channels from the Zee bouquet,
said that with the demerger, it will be possible to use its content library more
effectively as dubbing it in other languages will enable it to air it on its other
language channels. Additionally, the cross selling of channels will also be possible
with the increase in the cluster size, the management says. The
demerger will also help generate cost savings in the selling and distribution
expenses of Zeel. It said that redundancies would be eliminated and this will
further boost the company’s operating profit. Zeel
and ZNL have called for an EGM on 29 December to take the approval from their
respective shareholders on the proposed scheme of arrangement. For
the merger of six of ZNL’s R-GECs in Zeel, the two companies’ boards
have approved issuing four Zeel shares for every 19 ZNL shares. As
per the scheme, Zeel will add Zee Marathi, Zee Bangla, Zee Talkies, Zee Telugu,
Zee Kannada and Zee Cinemalu (yet to launch) along with the assets and liabilities
pertaining to these businesses. It will also add the assets of Zee Gujarati, a
discontinued channel, including
programme rights and IPRs. Post
scheme, the promoters’ holding in Zeel will go up to 42.82 per cent from
present level of 41.50 per cent. ZNL’s promoters holding will remain the
same at 54.14 per cent. Post
the acquisition and the issuance of new shares of Zeel to ZNL, the effective paid
up capital of Zeel would be Rs 484.48 million as compared to Rs 434.01 million
earlier.
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