Music Broadcast Ltd, the radio unit of media house Jagran Prakashan Ltd, has agreed to acquire Anil Ambani-led Reliance Broadcast Network Ltd to create India’s largest FM radio network.
Music Broadcast operates FM radio channels under the Radio City brand while the target company runs the BIG FM stations.
Music Broadcast will first acquire a 24% stake in Reliance Broadcast for Rs 202 crore via a preferential allotment of shares, it said in a statement. After receiving regulatory approvals, it will acquire the entire stake held by the promoters of Reliance Broadcast at an enterprise value of Rs 1,050 crore ($151 million).
The deal value is subject to adjustments on the basis of audited accounts for the year ended March 2019. The entire transaction is likely to close in the first quarter of the financial year 2020-21, Music Broadcast said.
Shares of Music Broadcast ended the day 1.37% higher at Rs 59.05 apiece on the BSE.
The two brands have “complementary offerings with limited overlap”, Music Broadcast said. The combined network will have 79 stations, making it the largest radio network in India, it added.
Reliance Capital chief financial officer Amit Bapna said the divestment was part of the company’s strategy to reduce its exposure to non-core businesses.
“We expect Reliance Capital’s debt to reduce by approximately Rs. 12,000 crore in the current financial year,” he said, adding that the figure represented around 70% of its outstanding obligations.
Music Broadcast was originally acquired by Jagran Prakashan in 2014 for around Rs 475-500 crore. It currently runs 39 stations and offers localised content to listeners through programmes spanning various genres.
Its 2017 initial public offering was subscribed more than 39 times. At the time, the IPO was the first by a radio operator following the Times Group-controlled Entertainment Network (India) Ltd going public in 2005.
MBL reported net sales of Rs 298.24 crore for the financial year ended March 2018, as per data available with VCCEdge.
The sale of Reliance Broadcast network will represent another effort by the Anil Ambani-led Reliance Group to meet its debt obligations. Earlier this year, the Supreme Court held Anil Ambani guilty of contempt after the Reliance Group’s telecom arm, Reliance Communications, failed to pay dues worth around Rs 550 crore ($78 million) to telecom equipment maker Ericsson. The group has since been monetising its assets to lower its dues.
Earlier this month, the National Company Law Tribunal admitted Reliance Communications Ltd for insolvency and allowed it to exclude the 357 days spent in litigation from the resolution process. The tribunal’s Mumbai bench also superseded RCom’s board, allowed a consortium of 31 banks led by State Bank of India to form a committee of creditors and appointed a new resolution professional to run the company.
Reliance Capital Ltd, the group’s financial services arm, said last week that it was exiting the mutual fund business by selling its entire 42.88% stake in Reliance Nippon Life Asset Management Ltd to Nippon Life Insurance of Japan and other financial investors in the joint venture. Reliance Capital said it would use the entire proceeds of about Rs 6,000 crore (around $860 million) to reduce its debt by a third.