RIL-Viacom18-Disney JV to add Rs 40 per share to Reliance's value, says Jefferies

The Reliance-Disney deal is expected to help Reliance get an upper hand in India’s intensely competitive video streaming market

Reliance shares gained half a percent on February 29 after the conglomerate signed a strategic joint venture with Walt Disney Co. to merge their media operations -- Viacom18 and Star India. The RIL-Viacom18-Disney transaction will add Rs 40 per share to RIL’s sum-of-the-parts valuation (SOTP), said Jefferies.

This partnership not only presents opportunities for enhanced ad inventory monetisation, but also promises potential reductions in content costs due to decreased competition, the brokerage said.

The RIL-Viacom18-Disney JV will result in what will become India’s largest media empire spanning TV broadcasting, streaming, movies, and sports. According to analysts at Jefferies, the joint venture is poised to secure the most lucrative cricketing rights in India, consolidating its position with a substantial 40 percent share of the advertising market.

"Disney's business valuation, often overestimated in media reports, is substantially lower than perceived, adding an estimated Rs 40 per share to RIL's SOTP," Jefferies added.

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RIL has agreed to invest at closing Rs 11,500 crore ($1.4 billion) into the JV for its growth strategy. The transaction values the JV at Rs 70,352 crore ($8.5 billion) on a post-money basis, excluding synergies. The formation of the JV is subject to regulatory, shareholder, and other customary approvals and is expected to be completed in the last quarter of 2024 or the first quarter of 2025.

Post completion, the JV will be controlled by RIL with 16.34 percent stake owned by RIL, 46.82 percent by its arm Viacom18 and 36.84 percent by Disney. Nita Ambani will be the Chairperson of the JV, with former Walt Disney executive Uday Shankar as the Vice Chairperson.

The new board will have 10 members, with RIL nominating five, Disney three, and two independent directors.

Also Read | What RIL’s Rs 70K cr JV with Disney entails — 10 points

In the previous session, Reliance shares settled at 2,915. So far this year, the stock has gained over 12 percent, outperforming benchmark Nifty which has risen nearly 1 percent during this period.

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