RIL Acquires Network18

Presented By: Group

9
Animesh Jaiswal IPMX090
Nigam Mehta - IPMX09035
Prashant Gupta IPMX09039
Subeer Kumar
Suman Roy Chowdhury -

Industry Background 2014

Total M&A deals of Indian companies
in 2014 stood at USD 50 billion
Why this steep rise in the number of
deals?
- Market consolidation
- Portfolio diversification
CAGR from 2013-2018 projected at
15% PwC
Trends in 2014
Digitization of the cable TV services
Rise of the regional media players
GDP contribution of 0.5%

The Two Companies

Indias largest private sector

company with a net profit of INR
219 billion (US$ 3.65 billion) as on
March 31, 2014.
The Group has businesses ranging from
exploration and
production of oil and gas; petroleum refining
and
marketing; petrochemicals comprising
polymers,
polyester and fiber.
Mr. Mukesh Ambani is the
chairman and MD of RIL

The Network18 Group

comprises of several media and
entertainment companies with
interests in television, internet,
films, e-commerce, magazines,
mobile content and allied
The Network18
businessesGroup operates in digital,
publishing
and e-commerce assets including
moneycontrol.com,
ibnlive.com, HomeShop18.com and
bookmyshow.
com.
Network18 also has
investments in Yatra, Stargaze
and other Capital18 portfolio
companies

Network18

Post-acquisition developments
Senior editors and editor-in-chief were replaced by a new team

Spat between RIL management and Rajdeep Sardesai over AAP

Reliance gained a media footprint in the Indian Television space

Popularity of the major news channels were affected
Reliance finally sold 3.10% of the total shareholding

Sequence of Events
Network 18 Financial position in 2011
During 2006, Bahl had embarked upon an acquisition spree venturing into
diverse sectors
The promoters had to aggressively raise money through debt and by end of FY
2011 consolidated loans were in excess of Rs25 billion whereas revenues were
only Rs16 billion.
This created enormous pressure on the company to meet its obligation to
lenders.
RIL Infusion of Cash 2012
The chairman and MD of RIL, Mr. Mukesh Ambani was approached by Bahl for
capital infusion into Network18
Reliance would invest in Network18 through a newly created venture
Independent Media Trust (IMT) which would buy Zero Coupon Optionally
Convertible Debentures (ZOCD)
A part of the investment was to be used to buy Reliances stake in the ETV
group of regional channels
RIL Takeover of Network18 2014
Reliance Industries announces plans to deploy Rs 4000 crore to, through IMT,
acquire 78% in Network18 and9% stake in TV18 (rest being acquired through

Evaluation of value addition

On July 8, 2014 RIL completed the acquisition of Network18, TV18 and Infomedia
Just before the acquisition, the stock price peaked to 65 rupees and then dropped to
around 45-50 rupees and stabilised.
Until the end of 2015 the stock performed better than it was performing before
acquisition on account that the debt had been taken care of by RIL pumping in
money.

Mar-13

Mar-14

Mar-15

Network18

Mar-16

Total Income

346.58

174.65

86.7

76.31

Total
Expenditure

365.9

241.54

769.8

161.43

Profit Before
Tax

-29.91

-74.94

-687.55

-90.96

1000
800
600
400
200
0
41334
-200
-400
-600
-800

41699

Total Income

Total Expenditure

42064

Profit Before Tax

42430

Regulatory & Legal Considerations

Independent Media Trust used for Investments
Zero coupon optionally convertible debentures
CCI approval for ZOCD investments by IMT in
2012
Open Offer post ZOCD investments by IMT in
2012

Objectives for Acquisition

Reliance had shown its interest in the media industry in 2008
itself by bailing out Ramoji Rao
By purchasing convertible debentures, Reliance gave strong
enough signal to industry experts of acquisition intention
Managed to acquire an undervalued company
Content License Agreement between RJIL and Network18
Overt and Covert objective.

Thank You