Comcast-led group makes offer to buy out Zee promoters

Industry:    2019-07-30

A consortium led by US cable major Comcast and comprising Atairos, Blackstone and James Murdoch’s Lupa Systems submitted a binding offer late Monday to buy out Subhash Chandra from Zee Entertainment, said people aware of the development.

Sources close to Zee, however, said they had not received any bid till late Monday evening. Last week, Zee Entertainment managing director Punit Goenka had told ET that the company had received one binding agreement for purchase of stake and was expecting another in the following days. He, however, did not disclose the identity of the bidders. Goenka had earlier said that he was expecting to sign a binding agreement by July-end.

The second bid that Goenka was talking about, one of the people said, was a financial one from a Singapore-based hedge fund, Broad Peak. This could not be independently verified.

ET, in its July 4 edition, had reported that the Comcast consortium was closing in on the Zee buy.

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Mails sent to Comcast and Atairos did not elicit a response till press time Monday, while Lupa’s India head, Nitin Kukreja, declined to comment. Blackstone couldn’t be immediately reached for comment. The promoters own 35.79 per cent of the company, of which 63.98 per cent has been pledged with MFs and other financial institutions. At current market price, the promoters’ stake is worth Rs 13,315 crore (around $1.92 billion) though most observers expect a 15-20 per cent control premium over the market value. The transaction, if accepted, will also likely trigger an open offer for an additional 26 per cent stake. The Zee stock has been very volatile — in the past year, it had moved between Rs 540.40 and Rs 288.95.

On Monday, Zee shares closed 4.1 per cent lower at Rs 387.35 on the BSE.

While Comcast will be leading the consortium, James Murdoch, who previously controlled Star India, is expected to act as the local partner on the ground and take up a small stake. Lupa also cannot have a more than 9-10 per cent stake in the company, as part of a non-compete agreement with Walt Disney Company after Rupert Murdoch sold 21st Century Fox (including Star India) to Disney. Atairos is a $4-billion investment company led by former Comcast CFO Michael Angelakis. Blackstone is the world’s largest PE fund. Recently, it bought Essel Propack from Ashok Agarwal, Subhas Chandra’s brother.

The Zee promoters need approval from their board and lenders before finalising any agreement. The deal will give a breather to Chandra, whose Essel Group is facing a severe debt crisis. Chandra had last year announced plans to sell half the promoters’ stake, then 41 per cent, in the company.

The Essel Group has been trying to sell businesses and assets across various verticals — power transmission, roads, renewables, etc — to reduce group debt of Rs 13,000 crore. It has also been in discussions with the Adani Group for solar parks and with Bharti Airtel for merging the DTH business.

The Essel Group owes Rs 7,000 crore to mutual funds and a stake sale has to happen before September 2019 to avoid a default on payment.

The $84-billion Comcast, led by Brian Roberts, has been a serial buyer and seller of media assets including cable networks, broadband assets, content providers, internet providers and even animation studios since the late 1980s. The company, however, lost out on 21st Century Fox after Walt Disney trumped its $65-billion bid last year. It has been scouting for assets in India and other high-growth markets. Zee gives it the much-needed India launchpad, said media analysts.

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