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Reliance buys into Eros International; forms $150 mn joint fund to produce content

20 February, 2018

Billionaire Mukesh Ambani-led Reliance Industries Ltd has agreed to buy a 5% stake in New York Stock Exchange-listed movie producer Eros International PLC, the companies said in a statement on Tuesday.

The energy-to-telecom conglomerate will buy the stake in Eros at a price of $15 a share, the statement said, without giving the total deal value. The purchase price is an 18% premium to Eros’ last closing price of $12.70 on the NYSE.

The total deal value would be around $48 million (Rs 310 crore), according to VCCircle estimates based on current shares and accounting for the fresh issue of shares by Eros to Reliance.

The transaction is subject to customary regulatory and other approvals, the statement said.

Eros International is the parent of Mumbai-listed movie producer Eros International Media Ltd (Eros India).

Separately, Reliance and Eros India said they have agreed to jointly produce content and will equally invest up to about Rs 1,000 crore ($150 million) to produce and acquire Indian films and digital originals in various languages.

In addition, Jyoti Deshpande, Group CEO and managing director at Eros, will be stepping down and move on to head the media and entertainment business at Reliance as president of the Chairman’s Office.

Deshpande will start work at Reliance from April, but will remain as a non-executive director on the board of Eros. Kishore Lulla will resume his position of Group Chairman and CEO at Eros, the statement said.

Deshpande will lead Reliance’s initiatives across broadcasting, films, sports, music, digital, gaming and animation businesses. She will also integrate Reliance’s existing media investments such as Viacom and Balaji Telefilms with a view to “build, scale and consolidate the fragmented $20 billion Indian media and entertainment sector”, the statement said.

Reliance, which gets most of its revenue from its oil and gas and petrochemicals business, has been rapidly expanding its other divisions such as retail and telecom. Its Reliance Jio Infocomm Ltd unit has created turmoil in the country’s telecom market ever since it launched operations in September 2016 with cut-throat tariffs.

The expansion of the media and entertainment business will find synergy with the telecom and digital businesses. Just last month, Reliance Jio and Eros Now—the over-the-top platform of Eros—formed a content partnership.

The deal with Eros comes barely days after Reliance said last week that wholly owned unit Reliance Industrial Investments and Holdings Ltd planned to acquire a stake in The Indian Film Combine Pvt Ltd, which is setting up a drive-in theatre and hospitality precinct comprising a hotel, a retail mall and a club, in Mumbai.

Reliance Industrial will acquire 65% of IFC from the existing shareholders for Rs 1,105 crore. This includes 20% from the Mauritian arm of private investment firm Xander Group, Inc. for Rs 340 crore and 45% from entities belonging to the promoter group of Reliance for Rs 765 crore. The remaining 35% of IFC continues to be held by the Maker Group.

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Reliance buys into Eros International; forms $150 mn joint fund to produce content

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