TV18-Infomedia deal: Co unlikely to revise offer price
Television Eighteen, which operates the business channels CNBC TV18 and Awaaz (Hindi business channel) as well as a clutch of online portals such as www.moneycontrol.com and www.yatra.com , marks its entry into the print business through its acquisition of a 40 per cent stake in Infomedia India.
The latter, best known for its directories business (Infomedia Yellow pages), operates other high-growth businesses that include publishing outsourcing and special interest magazines.
Acquisition price
The 40 per cent stake has been acquired at Rs 178 crore. TV18 is to acquire another 20 per cent stake in the company through an open offer to the public at a reported offer price of about Rs 238 a share; the current market price is already above the offer price.
TV18 is keen on acquiring a majority stake in Infomedia. But with an option to buy out an additional 13 per cent stake from Infomedia’s private-equity promoter ICICI Venture, the company is unlikely to revise the offer price to the public significantly.
At the current market price, Infomedia India trades at a valuation of 2.5 times its sales and may not be seen as too expensive for TV18, although considerable overhaul will have to be done at the operational level to improve Infomedia’s profitability.
Losses from a joint venture, impact of the rupee on outsourcing operations, and higher interest costs on loans taken to fund Infomedia’s acquisitions in recent years have acted as a drag on profitability.
Synergies
However, with the acquisition, TV18 has access to Infomedia’s significant printing and publishing facilities. It will be able to leverage content across television, online and print, in keeping with its strategy of being present across media platforms.
Infomedia has been looking at expanding its directory business to the online format and TV18’s substantial presence in this space through Web18 would be a strong advantage. TV18 will also work on adding more titles in the special interest magazine space.
Infomedia has about 20 titles in this business, the more popular ones being Cricinfo, Better Interiors, Overdrive and T3.
Content from these magazines could be tailored for TV18’s television shows and the online format.
ICICI Venture will continue to hold a stake in the company, which acts as a sign of confidence in the company’s potential post the takeover by TV18.
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