The Walt Disney Company (DIS) recently made a $454 million offer to acquire the remaining 49.6% stake in UTV Software Communications Ltd. (UTV), Bloomberg reported. The company offered $22.58 (1,000 rupees) per share to acquire the stake of its allies and public shareholders in the Indian media company.
Disney has started the process of delisting the shares of UTV from Indian bourses, subject to gain the publicly held outstanding shares. After the delisting process, the company also aims to take over the 19.8% promoter’s stake of UTV, including stakes of Rohinton Screwvala, Zarina Mehta, Unilazer Exports and Management Consultants Ltd and Unilazer (Hong Kong) Ltd.
Moreover, in a strategic move, Disney added that Mr. Screwvala would join the company as the head of its Indian operations. Screwvala has a track record of successfully delivering content rich programs to the viewers.
Further, the move will better position Disney to gain access into Bollywood and other programs, as UTV is one of the leading producers and distributors of cinema and television programs in the rapidly growing Indian entertainment industry. Moreover, UTV has been focusing on expanding its gaming division, thus diversifying its reach.
UTV is also India's first integrated global media company, which has extended its reach to new growth sectors. The company operates in five segments, including Broadcasting, Motion Pictures, Interactive, Games Content and TV Content.
Disney entered the Indian turf in 2006 by acquiring a 15% stake in UTV and buying Hungama television channel, which produces programs for kids. Since then, Disney continued to enhance its stake and became the largest shareholder of the company.
Walt Disney is one of the world's leading diversified entertainment companies. Moreover, the company commands a formidable portfolio of globally recognized brands, primarily its namesake brand Walt Disney, followed by ABC, ESPN and Marvel Entertainment. These renowned brands offer a strong competitive edge to the company and bolster its well-established position in the market against major players like News Corporation (NWSA) and Time Warner Inc. (TWX).
Currently, we maintain a long-term ‘Neutral’ recommendation on the stock. Moreover, Disney’s shares has a Zacks #3 Rank, which translates into a short-term ‘Hold’ rating
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