Countdown To Consolidation: RIL, Disney On Verge Of Sealing Media Mega-Merger

Reliance Industries (RIL) and Walt Disney Co. are nearing the conclusion of negotiations to finalize the significant merger involving stocks and cash, as the exclusivity period deadline of February 17 approaches, aimed at creating India's largest media and entertainment enterprise.

Viacom18 is likely to emerge as the largest shareholder in the combined entity, holding 42-45 per cent. RIL is expected to inject up to $1.5 billion in cash into the new venture and acquire a direct stake as well, as per sources cited in a report by the Economic Times. Collectively, Ambani Backed-RIL will possess a 60 per cent ownership stake, while Walt Disney will hold the remaining 40 per cent.

Reliance executives are currently developing a three-year capital allocation plan for all businesses, set to be presented to the board. According to the report, media business is a key component of growth plans. The current plan entails the formation of a subsidiary under Viacom18 Media to absorb Star India through a stock exchange. Valued at $4-5 billion each and deemed similar in size, both entities will see RIL acquiring the controlling stake using cash.

Jio Cinema will also be a part of the deal. Disney's India business valuation has significantly declined owing to sharp losses in its sports franchise. Viacom18's Indian entertainment network is a partnership among Ambani's TV18 Broadcast, Paramount Global, and Bodhi Tree Systems, an investment fund by James Murdoch and former Disney India chief Uday Shankar. As a shareholder in Viacom18, Bodhi Tree will indirectly hold shares in the new venture.

The Big 4 firms conducting due diligence from both sides, along with numerous law firms and company executives, are racing against the clock to finalize the deal. Although there is an option to mutually extend the deadline, both sides are committed to resolving any differences with the backing of their top leadership by the fiscal year-end. Given the dynamic nature of the Indian media landscape, there is a sense of urgency to expedite the consolidation process.