The merger of TV18 Broadcast Ltd (TV18), which operates India’s largest bouquet of news channels, and e-Eighteen.com Ltd (E18), which operates Moneycontrol, with parent Network18 Media & Investments Ltd (Network18) will create an integrated media entity that will eliminate the holding company discount and create fundraising opportunities to fuel growth.
The proposal, announced on November 11, aims to consolidate the TV and digital news businesses of the Network18 group into a unified company, establishing India’s largest platform-agnostic news media entity.
“The merged entity will be a mid-cap company with about Rs 15,000 crore of a market cap based on prevailing prices and will lead to institutional investors and indices evaluating the company more favourably," the analyst said.
With an extensive presence across languages in both TV and digital domains, the merger is poised to empower Network18 to consolidate and expand its business from a robust position. Shareholders will have a unique opportunity to engage in the group’s media business through one listed entity, Network18’s statement said.
The converged operations will result in synergies in content, revenue, and costs and eliminate inter-company transactions and borrowings. It is understood that it also creates headroom for any possible capital raise in the future for growth and deleveraging as promoter holding will be ~57% as against 75% currently.”
The merged entity will comprise 20 news channels in 16 languages and CNBCTV18.com, digital assets of Network18 (News18.com platform across 13 languages and Firstpost) and the Moneycontrol website and app. Viacom18, with its portfolio of JioCinema and 40 TV channels, will be a direct subsidiary of Network18, which will continue to hold its investment in BookMyShow.
As consumers and advertisers increasingly gravitate towards omnichannel experiences across different aspects of their lives, having a deep and integrated presence across both TV and digital media will enable the merged entity to serve them better. Further, as the Network18 group has been working towards convergence, an integrated entity for news gathering and dissemination is expected to result in cost and content synergies.
In the scheme of arrangement by Network18 Media & Investments, TV18 Broadcast, and e-Eighteen.com, the appointed date for the merger is set as April 1, 2023. For every 172 shares of TV18, shareholders will receive 100 shares of Network18. Similarly, for every share of e-Eighteen.com, shareholders will be entitled to 19 shares of Network18. These parameters are crucial aspects of the consolidation strategy, providing a structured framework for the merger.
PwC Business Consulting Services LLP (PWC BCS) and Ernst & Young Merchant Banking Services LLP (EY) have jointly produced a valuation report determining the fair share exchange ratio for the merger.
Network18 appointed PWC BCS, while TV18 and E18 engaged EY for this valuation exercise. In addition, BofA Securities India Ltd, Citigroup Global Markets India Pvt. Ltd, and HSBC Securities and Capital Markets India Pvt. Ltd offered fairness opinions as financial advisers for Network18, TV18, and E18, respectively. Khaitan & Co. serves as the legal advisor for the scheme. The merger is subject to obtaining all regulatory approvals.
Disclaimer: Moneycontrol is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.
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