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Disney, Reliance sign non-binding agreement for India media operations merger

Image Credits: Igor Golovniov/SOPA Images/LightRocket / Getty Images
Image Credits: Igor Golovniov/SOPA Images/LightRocket / Getty Images

According to a story in the Economic Times on Monday, Reliance Industries (RELI.NS), the most valuable company in India, and Walt Disney (DIS.N) have signed a non-binding term sheet to merge their respective media companies in India. The post cited sources that it did not name.

The newspaper said that the merger would result in Reliance retaining 51% of the company through a mix of cash and shares, while Disney would keep the other 49%. As a result, Indian billionaire Mukesh Ambani’s Reliance Group would have more sway.

It is anticipated that the transaction will be finalized by February. Reliance has stated that it intends to finish the process by the end of January, provided that regulatory permissions are obtained.

Neither Reliance nor Disney responded right away to Reuters’ requests for comment. According to a report by Reuters two weeks ago, executives from the company met in London to discuss the next phase of the media merger.

To compete with television interests such as Zee Entertainment (ZEE.NS) and Sony (6758.T), as well as streaming giants such as Netflix (NFLX.O) and Amazon (AMZN.O) Prime, a merger would result in the formation of one of the most potent entertainment empires in India.

Through its media and entertainment division, Viacom18, Reliance operates a large number of television channels as well as the JioCinema streaming application. As a result of Ambani’s decision to provide free streaming of the Indian Premier League cricket event, which Disney once owned in India, the company has been engaged in a bitter dispute with Disney.

As a result, Disney’s streaming service, Hotstar, has seen a significant decrease in users in recent quarters. Disney has been investigating the possibility of selling its India business, which consists of many television channels, or entering into a joint venture arrangement with another company.

According to the Economic Times, the planned transaction would establish a division under Reliance’s Viacom18 to acquire Star India ownership through a stock swap. The statement stated that the parties are working on a plan to spend one and a half billion dollars on the company. However, it did not clarify whether this was the overall amount or the amount each party would invest.

The newspaper has reported that the board of directors is anticipated to consist of an equal number of directors from Reliance and Disney, with at least two representatives from each company. According to the article, more attention is being given to the possibility of having at least two independent directors; however, this may be subject to change in the weeks ahead.

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