Mumbai: Zee has announced sale of 11% stake to Oppenheimer funds at a price of Rs 400, which is a premium of 10% over the CMP to accumulate total consideration value of Rs. 4,224 Crore.
While the company initially intended to offload 50% of its stakes, it divested only 11% stakes that brings down the stake of promoter down from 42% to 36% only. This helps the current management of ZEEL to retain the control to run the business as usual without any interference from the strategic international partners.
Even though, the stake sale has solved only half the problems with debt for the company standing around Rs 11000 Cr at group level, the management is confident of meeting the ends by selling some more minimal stake in ZEEL while the balance money would come through sale of non-media assets.
The above scenario puts ZEEL in positive note outweighing all the negatives surrounding its business until recently. Now, the promoters with over 20% stake in hand, can comfortably retain control and run the business with same spirit and passion, as financial investor has not demanded for any Board seat. Moreover, the group’s ability to monetise non-media assets in terms of better deals will reduce future burden on ZEEL.
With an investor like Oppenheimer buying 11% stake in the Company, it automatically validates their view on the company as the fund will hold close to 19%. Moreover, the tax amount in the transaction will be very small and will have minimal negative impact.
The entire stake sale timeline likely be over by the next two weeks and the group is expected to announce couple of deals related to non-media assets such as solar, road infra and transmission business in due course as they are in conversation with investors. Subsequently, it will enable prompter family to retire the entire loan against shares with enough stakes in hand for them to motivate and run the business.
The intent of Zee Group at the start was to get a global partner who could add synergy benefits. However, the absence of such partners will make the group go solo with amplifying its international businesses on its own, while, fighting the global giants like Star/Disney, Netflix and Amazon on digital front with its ZEE5.