Zee Entertainment (ZEE) announced that it has terminated the proposed acquisition of 9X Media and INX Music. ZEE has indicated the reason as non-completion of certain material conditions precedent.
In October 2017, ZEE had announced to acquire 100% stake in 9X Media and INX Music for Rs160cr cash deal. ZEE had proposed to acquire 91,453,000 equity shares of Rs10 each of 9X Media for Rs155.2cr and rest was for acquisition of 29.15% stake in INX Music.
New Silk Route, which owns about 80% stake in 9X Media, has been looking to exit the company since 2013. Sony Pictures Networks India had also agreed to buy 9X Media for over Rs200cr in 2016, however, the deal didn’t materialise on account of some legacy taxation issues.
9X Media operates a bouquet of six music channels - 9XM, 9X Jalwa (Evergreen Hindi), 9X Bajao (Hindi Classics), 9XO (English), 9X Jhakaas (Marathi music), and 9X Tashan (Punjabi music). Also, it has a digital platform, SpotboyE, for Bollywood's news, gossip, movie reviews and other updates.
The channel portfolio for Zee includes the flagship Hindi General Entertainment Channel (GEC) Zee TV, movie channel Zee Cinema, and regional channels Zee Bangla and Zee Marathi among others. Zee TV is at second (or a close third) spot in the Hindi GEC space. Zee enjoys a strong overseas franchise (172 countries) and more than 1bn subscribers worldwide. In February 2017, it sold Ten Sports to Sony for US$385mn, exiting the loss-making sports channel. Further, company expects the new businesses - OTT, movies and live events to contribute 33% to the revenue in next five years. It recently launched digital platform, ZEE5, with 100,000 hours of multilingual content.
The leadership positions of flagship channels and favourable marco in the entertainment space is expected to aid revenue and PAT CAGR of 15% and 17.7% respectively over FY18E-20E. EBITDA margin is estimated at 33.5% in FY20E (expansion of 375bps over FY17-20E). Stock currently trades at 27x FY20E EPS.
Zee Entertainment Enterprises Ltd ended at Rs570.85 up by Rs0.1 or 0.02% from its previous closing of Rs570.75 on the BSE.
(c) 2018India Infoline Ltd. All rights Reserved. Provided by SyndiGate Media Inc. (Syndigate.info)., source Middle East & North African Newspapers