Walt Disney Co (DIS)

[SAE]

UPDATE: Walt Disney Plans To Buy Out UTV Software Holders, Delist Firm

Walt Disney Co. (DIS) plans to take full control of India's UTV Software Communications Ltd. (532619.BY) and delist the company, as the U.S. entertainment giant seeks to expand in the South Asian nation's fast-growing media industry.

UTV Software said Tuesday its board approved a proposal from Walt Disney, which held 50.4% of the Indian media company's 40.6 million outstanding shares as of June 30, to buy out other shareholders for a maximum price of INR1,000 a share.

The deal, potentially valued at INR20.14 billion ($448 million), is one of the largest in the Indian media industry, say analysts. Executives at Disney weren't immediately available for comment.

The offer--at an almost 11% premium to the stock's closing price of INR901.80 on the Bombay Stock Exchange Monday--enthused investors Tuesday. UTV shares jumped 4.4% to INR941.30 at 0640 GMT in a weak broader market.

Disney's move to consolidate its five-year partnership with UTV comes amid a boom in the country's media and entertainment industry triggered by a rise in advertising spending and consumption.

India is the world's third-largest TV market--after China and the U.S.--with almost 138 million TV households, as per a report by KPMG and the Federation of Indian Chambers of Commerce and Industry. The country has about 88 million non-TV households, indicating the growth potential. The media and entertainment industry is likely to expand 14% annually until 2015, with segments such as TV, gaming and animation expected to outpace the industry growth, the report said.

Mumbai-based UTV's businesses include producing and distributing movies, producing content for television, running TV channels, and gaming and animation. Disney operates television channels, including Hungama TV and Disney XD, and distributes content in India.

UTV's founder group--R.S. Promoters, including Rohinton Screwvala, Unilazer Exports and Management Consultants Ltd., Unilazer Ltd. and Zarina Mehta--holds 19.8% of the company while the remaining is with public shareholders.

UTV said in a statement that Disney will first buy out the public holders and then the founder group at the same price offered to public shareholders. It will eventually delist the firm from the National Stock Exchange and Bombay Stock Exchange.

Post delisting, Screwvala, the founder chairman and current chief executive of UTV, will head Walt Disney Co. India Pvt. Ltd. as managing director, overseeing the Indian businesses of the companies owned and managed by the Disney group.

If the delisting is unsuccessful, Disney may "evaluate all potential strategies and opportunities" in relation to its investment in UTV Software, the Indian company said, without elaborating.

-By Dhanya Ann Thoppil, Dow Jones Newswires; [phone]; [e-mail]

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