Dish TV And Videocon Join Hands In India
The merged entity will be renamed as Dish TV Videocon Ltd.
India’s second largest direct-to-home provider Dish TV Ltd. has decided to merge one of its competitors, Videocon D2H Ltd. with itself. The merged entity will be called Dish TV Videocon Ltd., as per the media statement issued by the company.
Both companies have refrained from disclosing the deal amount so far, but the merged entity’s market capitalisation is expected to be around Rs 16,800 crore, according to BloombergQuint’s calculation.
Under the arrangement, Dish TV Videocon Ltd. will issue 85.77 crore new shares to Videcon D2H’s shareholders who individually stand to get 2.02 new shares in the merged entity for every one share held in Videocon D2H. Their combined shareholding will be 44.6 percent in Dish TV Videocon Ltd. This arrangement is subject to certain adjustments.
Dish TV shareholders will hold 106.68 crore shares of the new entity, which amounts to 55.4 percent.
The merged company Dish TV Videocon shall institute a new global depository receipt (GDR) listing on the Luxembourg exchange. American Depository Receipt (ADR) holders of Videocon D2H will have the option to either receive new shares in the form of GDRs or hold new shares directly.
The transaction is expected to be completed in the second half of 2017.
The rationale for the amalgamation is to provide better synergies, growth opportunities, increase operational costs and efficiences, according to the media statement.
The new entity will be headed by Jawahar Lal Goel, who currently is the Chairman and Managing Director of Dish TV.
This transaction, that brings together two powerhouse brands of the cable & satellite Industry in India, will provide us with a gateway to harness growth opportunities in an ultra competitive multi player environment. This combine will enhance value for all stakeholders – Consumers, Government,Employees and Shareholders.Jawahar Lal Goel, Chairman and MD, Dish TV
As of 30 September 2016, Dish TV had 15.1 million subscribers, while Videocon D2H had 12.5 million subscribers.
The investor presentation suggested that the amalgamation will result in Dish TV Videocon becoming the biggest television network in India by revenue, with an estimated Rs 5920 crore.
The merged entity will hold 16 percent of the market share in the country.
Dish TV had a net debt of Rs 625 crore, while Videocon D2H had a net debt of Rs 1536 crore at the end of the second quarter of the current financial year.
According to the company statement, the promoters of Dish TV are also in talks with Videocon D2H’s promoters to purchase some of their share in Dish TV Videocon after the amalgamation is completed.
The merger is subject to approval from the regulatory authorities, stock exchanges, and the shareholders of both companies.