Mukesh Ambani's Reliance Industries, the only Indian company in the fray to buy a stake in Subhash Chandra's Zee Entertainment Enterprises that owns the Zee group of television channels, is vying with global giants Comcast, Atairos, Apple, and Sony Corp after they have been shortlisted, reports say.
Comcast is a US cable giant that owns the broadcaster NBC Universal while Atairos is a $4-billion investment company of Michael Angelakis, a former CFO of Comcast. Sony Corp owns the Sony group of television channels and is on a rapid expansion spree.
The shortlist was made after these companies submitted non-binding bids amid the prospect of Comcast and Atairos teaming up to push their bid. Binding offers from all shortlisted bidders are due by April, sources say.
Though there were earlier reports of Chinese giants Tencent and Alibaba were interested in taking a substantial stake in Zee to enter the Indian broadcast scene, they are yet to make an offer.
Industry observers say the due diligence process is ongoing. "Most of the negotiations, management meetings are happening offshore. Some of the discussions are more serious while others are waiting in the wings and keeping a close tab," the Economic Times said quoting an unidentified official. "The April deadline is on track for now," said the official.
A Zee spokesman, who declined to comment on market reports, said the stake sale process of ZEEL is progressing at a steady pace. The official refused to share any more details citing confidentiality agreements.
The media report said sources were of the view that Sony was keen on buying out the incumbent promoters up-front while the other global players, who do not have a significant footprint in the fast-growing local television and media entertainment industry, may want to explore the possibility of acquiring an equal stake with the promoters initially before buying out the whole stake.
The Zee management feels a foreign buyer would want a local partner to navigate the complex, multilingual domestic market, reports say. Zee announced in November last year that its promoters, led by Chandra, planned to sell up to 50 per cent stake to a strategic partner as part of deleveraging their balance sheet. Later on, the management indicated its willingness to shed even a majority stake.
Zee share has lost about 23 per cent over the past year, reducing Chandra's leverage to retain a controlling stake. The current market cap is an estimated Rs 41,925 crore or $5.9 billion. The onshore and offshore entities controlled by the promoters own 41.62 per cent of the stake. Banks and financial institutions are holding almost 85 per cent of the onshore shares as security against advances.