In a meeting held earlier today, leading broadcasting platform Dish TV India Ltd informed the BSE that it will be entering into an agreement with Videocon D2H, another leading player in the set-top-box and service provider space, for an amalgamation or merger.
The agreement, which is a scheme of arrangement in compliance with sections 391 to 394 of the Companies Act, 1956 and/or the applicable sections of the Companies Act, 2013, entails the amalgamation of the VD2H into and with the DTIL; dissolution without winding up of VD2H; transfer of the authorised share capital from VD2H to DTIL; and lastly, a change in the name of DTIL, pursuant to the relevant provisions of the Companies Act and the relevant provisions of the scheme.
The two will thus join forces to create a leading cable and satellite distribution platform in India, which will serve their combined base of 28 million subscribers, out of a total of 175 million TV-consuming households in India. With a significant market share already, the joint-entity is eyeing the opportunity for significant further growth.
The Zee Entertainment Enterprises DishTV was one of the first entrants in the market, and was one of the pioneers of premium quality digital entertainment with tri-satellite technology that broadcasts hi-definition and standard definition signals. Videocon d2h, on the other hand, is the DTH arm of Videocon group, which broadcasts 570 channels and services on its platform. It uses MPEG – 4 DVBS - 2 technology.
The new entity, 'Dish TV Videocon', will be led by Jawahar Lal Goel as Chairman and Managing Director. In the meanwhile, the Vd2h principals shall have the right to nominate two directors on the Dish TV Videocon Board, one of whom shall be Vice Chairman and the other a Deputy Managing Director. Together, the two entities clocked revenues of Rs 5,915.8 crore and an EBITDA of Rs 1,826.2 crore on a pro forma basis for the fiscal year ended March 31, 2016. In a highly fragmented market with myriads of local players, these combined numbers catapult them to a leadership position.
On the occasion, Jawahar Lal Goel, Chairman and Managing Director of Dish TV, said, “We are pleased to announce this combination at a time when the cable and satellite industry in India is rapidly progressing on the path to digitisation. This transaction, which brings together two powerhouse brands of the industry will provide us with a gateway to harness growth opportunities in an ultra competitive multi-player environment. This combine will enhance value for all stakeholders – consumers, the government, employees and shareholders. Dish TV has been a pioneering and path breaking company, which has taken the pain and responsibility of establishing many new processes, like the electronic and digital payments system that were the business need of the initial years and went on to become the industry norm of a dynamic and throbbing industry. Now, we take the next leap in our very exciting and exhilarating journey.”
“Since the commercial launch of Vd2h seven years ago, we have created a highly successful and high-growth DTH business with a solid foundation. We went public on the NASDAQ with a vision to take the company to the next level and emerge as a leading, innovative and highly profitable Indian media platform. Today, we are very excited about this strategic combination to create a solid platform. With decisive and proven leadership at the front,Dish TV Videocon will go ahead to create value for all stakeholders - our customers, our employees, and our shareholders,” Saurabh Dhoot, Executive Chairman of Vd2h added.
At the close of the proposed transaction, the current promoters of Dish TV shall continue as promoters of Dish TV Videocon. The Dish TV principals are also in discussion with the Vd2h principals to purchase some of the latter's shares in the new entity post the amalgamation, details of which are likely to be finalised soon.
Dish TV Videocon shall continue to be listed on the National Stock Exchange and the BSE Limited in India and on the Luxembourg Stock Exchange in the form of GDRs. In the Scheme, holders of Vd2h ADRs will receive their new shares in the form of GDRs, unless they elect to receive and hold new shares directly.
At the moment, this union remains subject to some pending approvals from SEBI, the stock exchanges, shareholders and creditors of both companies, the Competition Commission of India, the High Court of Bombay and the Ministry of Information and Broadcasting. These formalities are expected to be completed by the second half of 2017.