Disney and Reliance Enter Final Phase of Media Merger Ahead of Week’s Negotiation Deadline

Disney and Reliance Nearing Culmination of Mega Merger Talks

Walt Disney Co and Reliance Industries (RIL) are on the brink of finalizing a substantial stock-and-cash merger, paving the way for the creation of India’s largest media and entertainment conglomerate.

Negotiation Deadline Looms as Companies Ramp Up Merger Efforts

As the exclusive negotiation period deadline of February 17 approaches, Disney and Reliance are intensifying their collaborative efforts to fine-tune the intricate details of the proposed mega merger, according to a report by ET.

Viacom18 Set to Emerge as Major Shareholder in Merged Entity

Discussions surrounding the merger suggest that Viacom18 is positioned to become the largest individual shareholder in the merged entity, potentially holding a substantial stake ranging from 42% to 45%.

RIL's Financial Injection and Ownership Structure Unveiled

Under the terms being deliberated, RIL is expected to inject up to $1.5 billion in cash into the newly formed entity, solidifying its position as the parent company with a projected 60% ownership. Meanwhile, Walt Disney will retain the remaining 40% ownership.

Reliance's Strategic Capital Allocation Plan Takes Center Stage

Simultaneously, Reliance executives are formulating a comprehensive three-year capital allocation plan encompassing all their businesses, with the media sector identified as a crucial component of their growth strategy. The plan is slated to be presented to the board imminently

Viacom18's Step-Down Subsidiary and Stock Swap Arrangement

As part of the proposed deal, a step-down subsidiary of Viacom18 Media is expected to be established, incorporating Star India through a stock swap arrangement. The current valuation of both entities is estimated to fall between $4-5 billion each.

RIL's Expected Cash Payment for Controlling Stake

With both entities assessed as comparable in size, it is anticipated that RIL will provide a cash payment for the controlling stake in this arrangement. The intricate details are being meticulously examined by the involved parties, including “The Big 4” firms handling diligence from both sides.

Jio Cinema Inclusion in the Merger Deal

Jio Cinema, falling under the Viacom18 umbrella, is set to be included as part of the merger deal, further consolidating the diverse assets involved in the transaction.

Timeline and Progress Update on Disney and RIL Merger Talks

A company executive, quoted in the report, highlights that time is of the essence as the involved parties, along with multiple law firms, are working diligently to provide finishing touches to the deal. The negotiation timeline is crucial as the February deadline looms.

Post-Merger Landscape: Disney's Previous Acquisitions and Recent Challenges in India

Recalling Disney’s previous significant acquisition of 21st Century Fox’s entertainment assets in 2019 for $7.1 billion, the subsequent rebranding of Star India’s wholly-owned subsidiary, Hotstar, as Disney+Hotstar is noted. The importance of Star India as a major revenue source for 21st Century Fox at the time of acquisition is emphasized.

Conclusion: The Road Ahead for Disney and Reliance Merger

As the negotiation deadline approaches, Disney and Reliance are navigating the complex terrain of mergers and acquisitions to solidify their positions in the ever-evolving media and entertainment landscape. The outcome of these talks holds the potential to reshape the industry dynamics, making the coming weeks crucial for both conglomerates and their stakeholders.

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