RIL to acquire 5% stake in Eros Plc for $48.75 mn; to jointly invest Rs 1000 cr on content dev with Eros India
MUMBAI: Mukesh Ambani’s Reliance Industries Limited (RIL) has agreed to acquire 5% equity stake in NYSE listed Eros International for cash aggregating to $48.75 million.
Reliance Industrial Investments and Holdings Limited (RIIHL), a wholly owned subsidiary of RIL, proposes to subscribe to 32.5 lakh ‘A’ ordinary shares at a price of $15 per share, which represents an 18% premium to last closing price. The transaction is subject to customary regulatory and other approvals.
RIL said that the investment has potential synergies with the current investments in the media business and also with the digital services initiatives of RIL and its subsidiaries. It also said that the investment will also help in fostering content ecosystems such as digital services, broadcasting, films, sports, music, digital, gaming, and animation.
Furthermore, RIL and Eros International Media (Eros India) have agreed to jointly produce and consolidate content from across India. The parties will equally invest up to Rs 1,000 crore in aggregate (approximately $150 million) to produce and acquire Indian films and digital originals across all languages.
In addition, Eros International Group CEO and MD Jyoti Deshpande will be stepping down from her executive role after more than 17 years in Eros and move on to head the media and entertainment business at RIL as a resident of the Chairman’s Office.
Deshpande will start her role at RIL from April 2018 but will continue to remain as a Non-Executive Director on the Board of Eros. Kishore Lulla will resume his position of Group Chairman and CEO of Eros.
In her new role at RIL, Deshpande will lead the company’s initiatives in Media and Entertainment to organically build and grow businesses around the content ecosystem such as Broadcasting, Films, Sports, Music, Digital, Gaming, Animation etc., as well as integrate RIL’s existing media investments such as Viacom and Balaji Telefilms with a view to build, scale and consolidate the fragmented USD 20 billion Indian M&E sector.
This is the second major investment by RIL in a content production company. Earlier, it had acquired 24.9% stake in Balaji Telefilms for Rs 413.28 crore. Balaji will use the proceeds from the transaction to further speed up content development initiatives, especially for ALTBalaji.
Recently, RIL-controlled TV broadcasting company TV18 had taken operational control of Viacom18 by acquiring additional 1% stake from Viacom for $20 million. TV18 now holds 51% in Viacom18 with Viacom holding the remaining equity.
These moves are part of RIL’s strategy to ramp up its content offering for its telecom service Reliance Jio. The telecom operator which has disrupted the telecom operator is building itself as telecom + content company. Having created the infrastructure to provide 4G services, the company now wants to retain customers by offering them lucrative content.
Reliance Jio’s has already aggregated a large amount of content through its digital entertainment services like Jio TV and Jio Cinema.
RIL MD and CEO Mukesh Ambani commented, “We are pleased to join hands with Eros, as it will bring further synergies into our plans, making for a win-win partnership. We are delighted to welcome Ms. Jyoti Deshpande into the Reliance family and believe that she will not only give wings to our plans but also play a pivotal role in transforming the sector.”
Commenting on the development, Kishore Lulla said, “I am very pleased that Eros is partnering with RIL in its entertainment journey with several synergies across technology, content and digital with Eros Now. We look forward to collaborating and growing as we continue to make new strides on the digital and content forefronts. I am confident that together, we can make a meaningful difference. Jyoti Deshpande has been an invaluable part of the incredible Eros growth journey and I am confident that she will make a positive impact on the industry in her new role at RIL. I wish her the very best of luck.”
Jyoti Deshpande commented, “Having worked and associated with Eros group since 1998, it has been an integral part of my professional career and I extend my heartfelt thanks to Kishore Lulla and the Eros family for the opportunity to build an amazing company together. I am delighted that RIL has strategically aligned with Eros, so the association continues. My new assignment at RIL will allow me to push boundaries, set new standards of excellence, assemble a world-class young leadership team and adopt a collaborative approach to architect and execute this ambition in true RIL tradition. I am genuinely honoured and humbled to have been granted this opportunity but more than anything I cannot wait to roll up my sleeves.”
Eros International is a leading global company in the Indian film entertainment industry. Eros acquires, co-produces and distributes Indian films across all available formats such as cinema, television and digital news media. For 12 months period ended 31 March 201 7, its consolidated revenue was $252.9 million and profit was $11.5 million.
Eros is incorporated/registered on 31 March 2006 under Isle of Man laws and is listed on New York Stock Exchange (NYSE). Eros has experience of over three decades in establishing a global platform for Indian cinema. Eros has an extensive and growing movie library comprising of over 3,000 films, which include Hindi, Tamil, and other regional language films. It also owns the rapidly growing OTT platform Eros Now.
The company generated a turnover of $252.9 million; $274.4 million; and $284.2 million in FY2017, FY2016 and FY2015 respectively. Eros has a presence in North America, Europe and India.