Zee Entertainment to sell 50% stake, aims to tech-media company
Zee Entertainment Enterprises said Tuesday its promoters led by Subhash Chandra plan to sell up to 50 per cent of their equity stake in the company to a strategic partner.
The move is expected to address the Essel Group's (the promoters) capital allocation priorities and "to pursue disruptive technological development and transform the business into tech-media company".
In a regulatory filing, Zee Entertainment Enterprises Ltd (ZEEL) said its promoters have conveyed their "intention to sell/divest up to 50 per cent of their equity stake in the company to a strategic partner".
Chandra and family along with its advisors met in Mumbai over the Diwali weekend to undertake a strategic review of its businesses in view of the changing global media landscape, Essel said in a statement.
"It has been decided to undertake a strategic review of Essel's shareholding in ZEEL with a view to maximising value for the business," the statement added.
The proposed transaction to divest up to 50 per cent of Essel's holding to such a partner is expected to address the Essel Group's capital allocation priorities, it added.
The promoters further said such a move will also allow ZEEL shareholders to capture the full value of India's largest entertainment broadcaster with an ever-strengthening bouquet.
As of the quarter ended September, promoter and promoter group firms held 41.62 per cent stake in ZEEL. At Tuesday's closing price of Rs 438.2 per share, their total holding is worth around Rs 17,517.49 crore.
While asserting that ZEEL has strong revenue streams, including advertising and subscription - domestic and international, they said, "However, there is recognition that a right global strategic partner will help in transforming ZEEL further, and maximise long-term value."
Essel has decided to appoint Goldman Sachs Securities (India) Ltd as their investment banker and US and European based LionTree as an international strategic advisor for this exercise.
The outcome of the strategic review is expected to be concluded by March/April 2019, it added.
"We hope that this transaction will meet the objectives of the Essel Group as well as the minority shareholders of ZEEL," the promoter group added.
In the family review, the promoters said the importance of technological advancements such as AI, lOT, 3D printing AR, VR and many were underscored and agreed that these would impact virtually all businesses across sectors and business practices will be driven by technological innovation.
"The review showed that the family needs to accelerate efforts to stay ahead of fast-changing trends," the statement added.
ZEEL currently has a viewership of 1.3 billion and close to 50 million digital viewers and it is "well placed to benefit from current market trends due to its strong brand and bouquet of domestic and international channels", Essel added.
Asserting that India remained a priority market for Subhash Chandra and the Essel Group, the statement said "the family believes that India is at the cusp of significant growth. The family will continue to invest in growth opportunities in India".
Regardless of the outcome of the exercise, Essel is committed to creating a significant long-term value in ZEEL and shall keep on contributing in every possible way going forward, the statement added.
(With inputs from agencies.)