Nasdaq-listed Videocon d2h (Vd2h) will merge its operations with the largest Indian DTH player Dish TV, in an all-share deal to form the leading distribution platform.
The board of directors of both the companies on Friday approved a scheme of amalgamation.
The proposed merger, which is subject to approvals, is expected to be completed in the second-half of 2017. The merged entity will be renamed Dish TV Videocon Ltd, with Jawahar Goel as the Chairman and Managing Director. The combined entity would have revenue of ₹5,915.8 crore (on a pro-forma basis) for the fiscal year ended March 31, 2016.
“Pursuant to the scheme, Dish TV Videocon shall issue 857.79 million shares as consideration and the Vd2h shareholders will be allotted 2.02 new shares of Dish TV Videocon for every one share held in Vd2h (subject to certain adjustments as set out in the Scheme),” the companies said in a statement.
This will result in Dish TV shareholders owning 55.4 per cent of Dish TV Videocon and the balance 44.6 per cent by Vd2h shareholders.
“The Vd2h principals shall have the right to nominate two directors on the Dish TV Videocon Board, one of whom shall be Vice Chairman and the other a Deputy Managing Director,” the statement added.
Jawahar Goel, Chairman and Managing Director, Dish TV, told BusinessLine that “ the merged company will have 16 per cent share of the total TV households in India” .
Saurabh Dhoot, Executive Chairman, Videocon d2h, said, “This coming together of the two brands will create a distribution platform with 27.6 million net subscribers. This kind of scale will unlock significant value for the stakeholders and further enhance revenue streams.”
Analysts say this consolidation is in line with trends seen in global markets and will give the two entities an edge over others, especially in terms of operating cost, broadcasting deals and content costs.
Jehil Thakkar, Partner and Head of Media and Entertainment, KPMG India said, “This consolidation was on expected lines as the DTH and cable TV space is highly fragmented with mutliple players. Most mature markets only have to 2-3 DTH players. After this consolidation in DTH space, similar consolidation is likely to be seen even in the cable TV space.”
Post completion of this transaction, the current promoters of Dish TV shall continue as promoters of Dish TV Videocon.
“The Dish TV principals are also in discussion with the Vd2h principals to purchase some of the Vd2h principals’ shares in Dish TV Videocon post the amalgamation, details of which are likely to be finalised soon,” the statement said. Dish TV Videocon shall continue to be listed on the NSE, the BSE in India and on the Luxembourg Stock Exchange in the form of GDRs.