Zee Entertainment drops after board's nod for acquisition of Fly By Wire International

Zee Entertainment Enterprises lost 2.55% to Rs 391.35 at 10:38 IST on BSE after the company said its board of directors approved in-principle an acquisition of 100% equity stake in Fly By Wire International, Bangalore.

The announcement was made after market hours yesterday, 14 March 2016.

Meanwhile, the S&P BSE Sensex was down 157.41 points or 0.63% at 24,646.87.

On BSE, so far 24,000 shares were traded in the counter as against average daily volume of 1.17 lakh shares in the past one quarter. The stock hit a high of Rs 401 and a low of Rs 389.70 so far during the day. The stock had hit a 52-week low of Rs 299.65 on 15 May 2015. The stock had hit a 52-week high of Rs 440.30 on 21 October 2015.

The large-cap company has equity capital of Rs 96.04 crore. Face value per share is Rs 1.

Fly By Wire International (FBW) provides aircraft charter services under a NSOP license obtained from Director General of Civil Aviation (DGCA) and currently owns/operates one Bombardier Challenger 605 aircraft. FBW clocked turnover of Rs 1.33 crore in the financial year ended 31 March 2015.

Zee Entertainment Enterprises (Zee) said that the acquisition shall be an all-cash deal. In addition to the consideration of Rs 2.75 crore payable for the entire stake in FBW, FBW which has the aircraft as the main asset in its books, also has an outstanding bank loan of Rs 58.50 crore availed earlier by FBW for financing the aircraft, Zee said. Zee initially proposes to acquire 49% equity stake in FBW and the balance 51% equity stake shall be acquired within 5 days of receipt of approval from Ministry of Civil Aviation. The process is expected to be completed by mid-July 2016, Zee said.

Explaining the rationale behind the acquisition, Zee said that during FY 2015-16, subsequent to sale of the smaller aircraft owned by the company, Zee has been chartering the aircraft from FBW on an exclusive basis. However, due to frequent use of the aircraft owned by FBW, besides dependency on the aircraft, the cost of hiring has also increased, Zee said. Hence in order to save costs and for ensuring better operational and administrative efficiency, it is considered expedient to own the aircraft by acquiring 100% equity stake in FBW, Zee said.

On consolidated basis, Zee Entertainment Enterprises' net profit declined 10.9% to Rs 275 crore on 17% growth in net sales to Rs 1595.08 crore in Q3 December 2015 over Q3 December 2014.

Zee Entertainment Enterprises is one of India's leading television media and entertainment companies. It is amongst the largest producers and aggregators of Hindi programming in the world, with an extensive library housing over 210,000 hours of television content.

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