Merger of TV18 Broadcast, Hathway, Den Networks to Network18 postponed

A year after announcing the merger of Den Networks, TV18 Broadcast, and Hathway Cable & Datacom into Network18 Media, Mukesh Ambani Reliance Industries (RIL) postponed the transaction.

Den Networks, a cable distribution company owned by RIL, said Wednesday that it had decided not to proceed with the composite arrangement plan it was to merge with Network18 along with its sister concerns.

“Given that more than a year has passed since the board considered the scheme, it has decided not to proceed with the arrangement envisaged in the plan,” Den said in a statement to the stock exchanges.

The development comes within a month of an offer for sale (OFS) launched by RIL to scare its stakes in Den and Hathway. RIL subsidiaries were looking to offload 19.1 per cent in Hathway and 11.63 per cent in Den for Rs 853 crore and Rs 269 crore, respectively.

While OFS Den was fully subscribed, Hathway’s was partially subscribed. Champion holding in Den before the OFS was 86.53 percent, while in Hathway it was 94.1 percent. The sales floor price of Hathway and Den shares was pegged at Rs 25.3 and Rs 48.5, respectively.

In the past month, Hathway and Den share prices have dropped 15 percent and nine percent, respectively, while TV18 Broadcast has declined 6.5 percent. On the other hand, Network18 has seen its share price increase by 1.85 percent.

Under the arrangement scheme, TV18 shareholders would receive 92 shares of Network18 for every 100 shares they hold. While Hathway and Den shareholders would get 78 shares and 191 shares (from Network18) for every 100 shares they hold.

More importantly, the merger would have allowed Network18 to increase at a time when consolidation has been growing in the sector and could have sought a strategic partner if necessary.

In October last year, RIL postponed merger talks with Sony Pictures Networks for its entertainment
business.

The company would have benefited from streamlining operations and strategy, focused management, and risk reduction through consolidation, said Karan Taurani, vice president of research at Elara Capital.

Based on the end of Tuesday, Network18’s market capitalization stood at Rs 4,031 crore.

As at March 31, Network18’s total debt was Rs 2,413 crore. Net sales for the period stood at Rs 4,705 crore, a decrease of 12 per cent over the period a year ago. While, it reported a net profit of Rs 32 crore in FY21 against a loss of Rs 237 crore in FY20.

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