Walt Disney offers to acquire UTV for about Rs 2,000 crore
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The Walt Disney Company made a $454 million offer to buy out its partners and public shareholders in an Indian media company, the companies said on Tuesday.
Disney offered Rs 1,000 ($22.58) a share to acquire the 49.6 per cent stake that it did not already own in UTV Software Communications, which makes movies, operates TV channels and produces video games in India's fast-growing market. The offer is about 11 per cent above UTV's closing share price on Monday.
In a statement, Disney said it had started a process to delist shares of UTV from Indian stock exchanges, which could take several months. If the company is successful, it will also take over the stakes of the husband-and-wife founders of UTV, Rohinton Screwvala and Zarina Mehta. Screwvala would then join Disney as the head of its Indian operations, the company said.
In 2006, Disney spent $44.5 million to buy a 15 per cent stake in UTV and acquired Hungama, a television channel for children's programming created by UTV. Since then, it has increased its stake in UTV to 50.4 per cent. UTV's share price has climbed steadily in the last 12 months after tumbling in 2008, when it became very difficult for Indian companies, especially those in the media business, to raise money from investors.
On Tuesday, UTV shares jumped 5.4 per cent, to Rs 950.45, after the Disney offer was made public.
The company earned $30.6 million in the year ended March 31, up from $12 million in the period a year earlier.
The Indian media market, while growing fast, is highly competitive and fragmented. Most TV channels struggle to make money because there are a dozen or more players in every segment of the market.
The Hindi film business, known as Bollywood, churns out about 200 movies every year and ticket sales do not cover the cost of production for many of them.