Videocon to buy Planet M

Dhoot's first consumer durables retail venture Next is already a hit and now NDTV has learnt that Videocon is getting into music retail by picking up majority stake in Planet M.

Planet M stores were owned by Bennett Coleman and Co Ltd which was set up in 1999. It has 150 stores across the country and has been planning to open 500 stores in the next four years across metros, mini metros and Tier II cities.

Planet M has been growing at 40 per cent over the last four years. Even though no official announcement has been made yet sources say that the deal was sealed last weekend.

What is interesting is that BCCL itself is a strategic investor in Videocon. But with Dhoot looking at the retail space aggressively, it makes a strategic fit. According to the sources, the deal could be worth around Rs 125 crore-Rs150 crore.

While Planet M's turnover is a little over Rs 100 crore BCCL is unlikely to sell the real estate that Planet M owns. Videocon may use either Videocon Appliances or subsidiary E-Mart India Private Limited as the vehicle for the deal. E Mart houses the Next chain of stores.

While BCCL officials could not be reached, the Videocon management refused to give details. When contacted, Videocon's boss Venugopal N Dhoot told NDTV “Nothing has been finalised yet. We will let you know when we are in the position to inform the media.”

But investors saw good value in the deal with Videocon Appliances closing more than 16 per cent higher after the story broke.

“As a group they have been making lot of acquisitions. They are in backend, this will help them to get into front end,” said Anil Advani, Head-Research, SBI Capital.

Planet M has been diversifying on its own. It is getting into digital downloads with CD sales taking a hit, next in line was DVD rentals. Videocon, a hardware company, also wants to enter the specialty retail space in a big way and Planet M offers them yet another vertical.