Zee To Acquire Controlling Stake In Etc

Zee Telefilms is set to acquire a controlling stake in ETC Networks in an all cash deal valued at around Rs 25 crore. ETC Networks owns ETC Punjabi and ETC Music.

In the first step, Zee would acquire a 48.4 per cent stake in ETC Networks for Rs 17.84 crore at Rs 31.50 per share from the three promoters, Jagjeet Singh Kohli, Yogesh Shah and Yogesh Radhakrishnan. Zee is also planning to acquire an additional stake in ETC through the preferential allotment route and has estimated the value of this component to be around Rs 7 crore, the pricing of which will be decided later.

After the change of management control, the day-to-day functions of ETC will continue to be managed by the existing managment team headed by Kohli while Zee Telefilms will have control of the board.

"Zee Telefilms will be making an open offer to all the shareholders of ETC in accordance with Securities and Exchange Board of India guidelines," Sandeep Goyal, group broadcasting CEO of Zee Telefilms, said. "The entire process is expected to be completed in approximately three months after taking all regulatory approvals. The pricing of the open offer will also be announced within the next four days," he added.

"The strategic acquisition is another step in Zee's plan to achieve world leadership in key content segments serving the South Asian diaspora. It puts us in a extremely competitive position in the music and Punjabi segments and is a foundation for building more value-creation opportunities," said Goyal.

With this transaction, the Zee-Turner bouquet will be enhanced from 17 channel to 19 channels.

Also as a result of this transaction it is expected that there will be improved content offering, which will drive viewership and subscriber fees. Zee will bring its strength in sales and marketing to the Punjabi and music channels.

Zee's Alpha Punjabi channel has a 24 per cent market share and ETC Punjabi has a 34 per cent market share. With this transaction, the combined share comes up to 58 per cent for the two Punjabi channels.