Mukesh Ambani's Reliance set to acquire over 50% stake in Disney India, says report

Mukesh Ambani-led Reliance Industries is all set to acquire over 5- percent stake in Disney India just a few months ahead of the mega-merger.

Reliance Industries Limited (RIL), led by billionaire Mukesh Ambani, is set to acquire over 50 percent stake in Disney India in preparation of the mega-merger between the two media entities in a few months, reported Reuters.

Disney and Reliance are in talks to finalise their merger in February 2024. (Reuters) (REUTERS)

Ambani's Reliance is expected to pick up around 51-54 percent stake in the company, valuing the US giant's domestic business at $3.5 billion. The valuation of Disney has taken a significant hit due to the merger, previously estimated to be at $15-$16 billion prior to the deal.

While RIL is expected to pick up around 51 percent stake in Disney India, around 9 percent will be acquired by Bodhi Tree, a joint venture between James Murdoch and former top Disney executive, Uday Shankar. Disney will hold around 40 percent stake in the merged entity.

Disney's TV and streaming business in India has struggled over the years, with its digital platform facing a user exodus in stiff competition over cricket streaming with Ambani's platform. Disney Plus and Jio Cinemas have been battling it out for the exclusive streaming rights for Indian cricket matches, with Hotstar's viewership taking a major hit due to the same.

The deal will strengthen Reliance's hold over India's $28 billion media and entertainment market, especially after a separate $10 billion merger deal between Japan's Sony and India's Zee Entertainment collapsed last week.

Reliance and Disney are expected to sign the deal in February 2024, merging into the biggest media and streaming entity in India once the merger is complete. However, a final date for the same has not been announced yet.

Reliance and Disney, which each have a streaming service as well as 120 television channels between them, have been in talks for months to create an entertainment superpower in the world's most populous nation.

Details of Reliance-Disney merger

Reliance and Disney are set to build the biggest media entity in the country with this mega-merger. Through this deal, Viacom18, the broadcast division of Ambani's Reliance Industries, will merge with Disney's India businesses.

While the final percentage in stake could change, it is expected that Reliance and its entities will hold 50 percent stake and Disney will hold around 40 percent. A source quoted by Reuters said the deal talks were in advanced stages and some tax related matters were still being ironed out, though broad contours were almost finalised.

However, a Disney-Reliance merger could face many antitrust challenges due to the market power they could wield, especially as Sony and Zee were close to a separate merged entity in India.

Meanwhile, the significant dip in the valuation of Disney India is partially because of the fall through of the Zee-Sony merger, which led to Zee Entertainment backing out from a $1.4 billion deal. Disney is now mulling legal action against ZEEL for calling off the agreement, said sources.

(With inputs from Reuters)