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Disney and Reliance Nearing Final Phase of Mega Media Merger

Disney and Reliance Industries move closer to finalizing their mega media merger, poised to create India's largest media and entertainment conglomerate, as negotiations enter the concluding phase.

Walt Disney Co and Reliance Industries (RIL) are entering the concluding stages of their monumental stock-and-cash merger, poised to establish India's largest media and entertainment conglomerate.

As the deadline for exclusive negotiations approaches on February 17, both entities are intensifying efforts to solidify the intricacies of the merger, according to reports from ET.

Under the proposed terms, Viacom18 is slated to emerge as the primary shareholder in the merged entity, potentially securing a significant stake ranging from 42% to 45%.

RIL, the parent company, is anticipated to infuse up to $1.5 billion in cash into the newly formed entity, alongside acquiring a direct stake. With the Mukesh Ambani-led conglomerate expected to retain a 60% ownership, Walt Disney will retain the remaining 40%.

Concurrently, Reliance executives are formulating a comprehensive three-year capital allocation plan encompassing all business verticals, with a specific focus on the media segment as a key driver of growth.

As per the current proposal, a step-down subsidiary of Viacom18 Media will be established, incorporating Star India through a stock swap arrangement. Both entities are assessed to have comparable valuations ranging from $4 to $5 billion, with RIL expected to provide cash payments for the controlling stake.

The integration will also encompass Jio Cinema, a subsidiary of Viacom18, as part of the consolidated deal, enhancing the breadth and depth of the combined media offering.

According to company executives involved in the negotiations, extensive diligence is underway from both sides, with the involvement of top advisory firms and legal counsels to finalize the deal within the stipulated timeline.

In a significant move in December, the two conglomerates signed a non-binding term sheet in London, laying the groundwork for the impending merger, subject to regulatory approvals.

Walt Disney Co's acquisition of 21st Century Fox's entertainment assets in 2019 for $7.1 billion positioned Star India, including its subsidiary Hotstar, as a pivotal asset within its portfolio. Subsequently, Hotstar was rebranded as Disney+Hotstar, consolidating Disney's foothold in the Indian market.

However, recent challenges have surfaced for Disney in India, particularly following the loss of streaming rights for the Indian Premier League (IPL) in 2022, which were secured by Viacom18 for a staggering $6.2 billion for the 2023-2027 period.