RIL To Merge TV18, Hathway And Den Networks With Network18
Reliance Industries Ltd. is consolidating its media and distribution subsidiaries under Network18 Media & Investments Ltd. as the oil-to-telecom conglomerate continues to reorganise its businesses.
The news broadcasting business of TV18 Broadcast Ltd. will be housed in Network18 Media & Investments, according to a statement filed by the latter with stock exchanges. TV18's interests in 51 percent subsidiaries Viacom18 and AETN18, as well as IndiaCast, the 50:50 joint venture with Viacom18, are part of the consolidation, the statement indicates. Cable and broadband businesses of Den Networks Ltd. and Hathway Cable & Datacom Ltd. will be housed in two separate wholly owned subsidiaries of Network18.
Shareholders will get:
- 92 shares of Network18 for every 100 shares held in TV18.
- 78 shares of Network18 for every 100 shares held in Hathway.
- 191 shares of Network18 for every 100 shares of Den.
Reliance's holding in Network18 will reduce to around 64 percent from 75 percent once the merger, subject to approvals, is completed.
The board of directors of the respective companies approved the scheme of amalgamation and arrangement at their meetings held today. The appointed date for the merger shall be Feb. 1, 2020.
The restructuring shall create value-chain integration, and render substantial economies of scale, the filing said, adding that scheme shall also simplify the corporate structure of the group by reducing the number of listed entities.
Network18 will be net-debt free at consolidated level, providing a solid base for growth as well as improved shareholder returns.Network18 statement
The move is the fourth step executed by the group to reorganise the various assets and create better shareholder value through a leaner listed universe and providing independent value to each business segment, according to a report by Target Investing. “We see this as a positive event for Network18 and Reliance Industries as this will deliver better value to the segment as it provides better cash flow management and better cross-selling of services.”
The company will now be net debt-free and can allocate free cash flow to the businesses as and when required, the brokerage firm said. The move could also bring the company closer to get a strategic investor or private equity on board to unlock value, it said.
Morgan Stanley, too, sees improvement panning out in refining, telecom and chemicals cycles. The deleveraging process is gaining clarity on account of the merger, it said.
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