Disney and UTV Group promoter Ronnie Screwvala have an open offer for the BSE listed UTV Software Communications, a media company with investments in Films, Television, New Media, Music and Gaming. Via an open offer which closed October 27th 2008, Disney and entities controlled by UTV promoter Rohinton (Ronnie) Screwvala picked up 22.65% in the company at a price of Rs. 860.79 per share, which amounts to a total acquisition price of Rs. 666.72 crores. The share price has plummeted from around Rs. 780 at the beginning of October, to around Rs. 227. The deal gives the two a combined shareholding of 83.25%, with the public shareholding in the company down to 16.75%.
What is not clear, is the split between UTV and Disney. Some reports have pegged Disney’s stake at more than 50% – hence a majority stake. However, a UTV spokesperson had told me in February that the Open Offer is a means for Disney to acquire 32.1% stake in UTV, and no more.
A recent email sent out by Screwvala suggests the same: “In the Shareholders’ Agreement between me and Disney it is clearly articulated that for a period of 4 years from the date of completion of the Open Offer, Disney Shareholding will not exceed 32.1%, nor will Disney exercise voting rights in excess of 32.1%.”
This suggests that Disney has acquired the option of increasing its stake after four years. (Update) According to a BSE filing before the Open offer, Disney owned 37.29% in the company.
We’re awaiting further inputs from UTV on the shareholding of UTV Software Communications Ltd.
Remember that this deal has to be such that Disneys shareholding in UTV Global Broadcasting Ltd, of which UTVs news channels are a part, does not exceed 26%, which is the FDI (Foreign Direct Investment) limit for news companies. Earlier this year, Disney had also picked up around 15% stake in UTV Global Broadcasting Ltd.
Screwvala and the promoter group entities – Unilazer Exports and Management Consultants Ltd, Unilazer (Hong Kong) Ltd also the right to acquire all the shares tendered in the open offer back from Disney.
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2 Comments until now.
Before UTV replies to the confusion you seem to have on its shareholding pattern, let me clarify since I have some clue (though not a lot) on this matter…
both the points you mention are correct… Disney’s shareholding in UTV is more than 32.1%… and Disney is not supposed to hold more than 32.1% in UTV… what reconciles the two apparently differing points is the agreement between Ronnie and Disney… Ronnie did not want to give up control of UTV so early in life ;)… so his agreement with Disney states that Disney will acquire more than 32.1% in UTV (equal to his holding) but he will have the first right of refusal (some kind of a call option) on those shares (over and above the 32.1% share)… I do not know the length, period of this option or rofr… I do know that ronnie will have voting rights on all UTV shares held by Disney over and above the stipulated 32.1% during this period… after this period, disney is free to keep, sell this holding…
Hope this helps…
This may possibly breach the govt FII/FDI cap for news/biz news channels. How are they reconciling with that.