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Zee Media to demerge and list print media biz
MUMBAI: Subhash Chandra-promoted Zee Media Corporation Ltd (ZMCL) has decided to demerge and list its print media business, which includes English daily DNA, on the bourses.
The company has got the board’s approval to consolidate its print media business under Diligent Media Corporation Ltd (DMCL). Subsequently, the entity will be demerged and listed on the Bombay Stock Exchange and the National Stock Exchange.
ZMCL’s print business spreads across three companies—DMCL, Mediavest, which is a holding company of DMCL, and PriMedia, which is into printing newspapers, periodicals, financial statements, magazines, annual reports, books and others on job work basis.
Mediavest and PriMedia are proposed to be merged with DMCL to create a consolidated entity for the print business. The print media business of ZMCL reported a turnover of Rs 108.36 crore (Rs 1.08 billion) in FY16. This constituted 19.96% of ZMCL’s total turnover in FY16.
For the demerger of print media business, each shareholder of Zee Media will get 1 equity share of DMCL for every four equity shares held in Zee Media.
For the merger of Mediavest and PriMedia into DMCL, no shares will be issued since pursuant to the aforesaid demerger, they would become wholly owned subsidiaries of DMCL.
The decision to demerge DMCL has been undertaken to lend greater focus to the print business. The print and TV businesses have different regulatory and business challenges, thus requiring greater focus to manage the two.
Zee Media said that it will be able to attract foreign investors up to 49% after carving out of the print media business, subject to necessary regulatory approvals. The foreign direct investment (FDI) limit in TV is 49% and print is 26%.
The demerger will lead to simplified and efficient business structure besides offering more focused management and greater visibility on the performance of individual businesses.
Further, the demerger of the print business will result in significant deleveraging from Zee Media’s consolidated balance sheet. The demerger will result in improved PBT at Zee Media consolidated level.
Based on the financials for the six months ended 30 September, the proforma PBT (excluding exceptional items) of residual consolidated Zee Media will improve by approximately Rs 25 crore due to the aforesaid demerger.
Merger of Maurya TV into ZMCL
The board has also allowed amalgamation of Maurya TV into ZMCL. Maurya TV was acquired by ZMCL for Rs 7.79 crore in 2015. The merger of Maurya TV into ZMCL will lead to a reduction in administrative costs, thereby helping achieve better operational and management efficiency.
For the merger of Maurya TV into Zee Media, no shares will be issued to shareholders as Maurya is a wholly owned subsidiary of Zee Media.
The proposed restructuring has an appointed date of 1 April 2017.
The transaction is subject to the customary statutory and regulatory approvals including approvals of the HCs, stock exchanges, FIPB, MIB, the respective shareholders and creditors of each of the companies.
The merger will become effective following the demerger. The entire restructuring initiative is expected to be completed by Q2 FY17.