US-based telco billionaire Bhupendra Kumar Modi is expected to close the deal in June for buying out the 32 per cent holding of the Indian promoters in Sony Entertainment Television (SET) India for $320 million. This pegs the valuation of SET India at $1 billion.
BK Modi is making the acquisition through Modi's company MCorp Global which has subsidiaries including mobile telephony service provider Spice Communications Ltd, technology retailer Hot Spot Retail Pvt. Ltd and mobile handset maker Spice Mobiles Ltd.
For Sony Pictures Entertainment which holds 60 per cent in Multi Screen Media (the new name of SET India), the entry of Modi will mean that it can drive synergies with the telecom business. Modi also runs a multiplex business under Spice World.
Though the Indian promoters had long been wanting to offload their stake, they were stuck with a valuation that was lower than their expectations. Sony had been in a financial mess but the success of the Indian Premier League is seen in positive light. Sony has acqquired the IPL rights for ten years for $918 million.
In 2000, US-based private equity group Capital International had picked up 8 per cent stake for $200 million, valuing the company at $2.5 billion.
The buyout will put at rest the long tussle between Sony Pictures Entertainment (SPE) and the Indian promoters who had even dragged the multinational giant to the Bombay High Court in February this year, questioning the board's capital call to its shareholders for infusing $40 million.
The Indian promoters who include Sushil Shergil, Sudesh Mani Iyer, Rakesh Agarwal, Jayesh Parikh, Raman Maroo, BR Sule and film actor Jackie Shroff, were pressing Sony for listing the company through an initial public offering (IPO). They hold their stake in MSM through Atlas Equifin and Grandway Global Holdings.
Source: Indian Television