Perspective on Zee announcing final deal contours with Sony By Mr. Siddhartha Khemka, Motilal Oswal
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Below is perspective on Zee announcing final deal contours with Sony By Mr. Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd
* Zee announced completion of the due diligence and final contours of the deal. The structure remains as per earlier announcement with Sony holding 51% stake in the entity and Promoter’s holding 4%, while the rest be held by public. The deal now should go for regulatory and shareholder/creditor approvals which may take 3-4 quarters.
* While Zee had a healthy balance sheet and market position, but strategically the merged entity’s scale will drive better market standing (revenue and cost synergies) and ability to intensify OTT foray.
* The merged entity’s higher competitive position in the market and synergy gains, will give companies significant potential to improve profitability. Improving corporate governance and operational performance could aid in the long run significantly.
* The stock despite the rally in last couple of weeks is still trading at below 20x and including the Sony Pictures Network India (SPNI) is yet valued attractively. Improving corporate governance and operational performance could aid in the long run significantly.
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