Plans by Sony Entertainment Television (SET), now called Multi Screen Media (MSM), to sell a 32% stake to the BK Modi Group for about $320-350 million seem to have run into some last mile hurdles.
Mr Modi is in advanced negotiations to buy out the Indian shareholders, who have been looking for an exit for several years. The shareholders include Shemaroo Entertainment MD Raman Maroo, Singapore-based Rakesh Agarwal, World Media Group director Sudesh Iyer, MobiApps Holding’s Jayesh Paresh and actor Jackie Shroff.
However, the deal, that was supposed to have been executed by now, seems to be experiencing some delays. The first being that Mr Modi is negotiating for management say in the running of the local company. This is not acceptable to SET, the Indian business, as traditionally the company has only been run by Sony Pictures Entertainment, which owns about 61% in the company.
The other issue is that the future plans and projections that Mr Modi and the local management have made are not in tandem, Mr Modi is being a lot more aggressive. Mr Modi will be in LA next week to meet with the Sony officials. According to an insider, close to Mr Modi, the deal would be closed in July.
The sources further said that the objections were actually only coming from the local management of Sony. “The Sony promoters are as aggressive as Mr Modi,” the insider said.
Atlas Equifin and Grandway Global Holdings, the two investment firms through which the Indian investors have a 32% stake will be acquired by BK Modi through Mcorp Global, the holding firm for BK Modi’s businesses under the Spice brand. Mcorp Global’s subsidiaries include mobile telephony service provider Spice Communications, technology retailer Hot Spot Retail and mobile handset maker Spice Mobiles. The group also runs multiplex chain Spice World.
MSM owns television channels like SET India, SET Max, SAB TV and SET Pix If the deal goes through it will end all the shareholder issues that the company has been facing, which has, in turn, hampered the company’s growth. However, the position of the deal will be clear after the next meeting between Mr Modi and Sony.
Though Indian promoters had long been wanting to offload their stake, they are stuck with valuation tussle, apart from the fact that potential buyers saw no exit option from the company. Sony previously had witnessed a financial downturn, with the Indian promoters refusing to pump in any further money.
There have been speculation about linkages between the SET Max deal and an unrelated deal in Spice Telecom, a joint venture between Mr Modi and Telekom Malaysia. Mr Modi is believed to be close to exiting that business though no formal announcement has been made. According to some accounts, proceeds from that divestment might fund the SET transaction. The insider close to Mr Modi denied any such link. He said the paperwork for the Spice transaction was in its final stages and an announcement could come soon.
Source: Economic Times