Disney Offers to Buy Out UTV Software for $454 Million to Expand in India

Walt Disney Co. (DIS) offered to buy the rest of India’s UTV Software Communications Ltd. (UTV) it doesn’t own for as much as 20.1 billion rupees ($454 million), as the world’s biggest media company seeks to expand in Bollywood.

Disney, which owns 50.44 percent of UTV, offered to buy all remaining outstanding shares for no more than 1,000 rupees each, the Mumbai-based company said in a statement today. That’s 11 percent higher than the closing price yesterday.

The buyout will give the Burbank, California based company control of UTV, which makes and distributes movies and produces television programs, as rising incomes boost spending on entertainment in Asia’s third-largest economy. Revenue from the film industry in India may grow to 132 billion rupees in 2015 from 83 billion rupees last year, KPMG said in March.

“Part of Walt Disney’s rationale for increasing its stake in UTV is to get more of a foothold in the film industry,” said Rohit Maheshwari, an analyst at KR Choksey Shares & Securities Pvt. in Mumbai. “It’s the right time to do this because UTV is one of the few players in the market that’s been really successful at making movies.”

UTV rose 5.4 percent to 950.15 rupees at the 3:30 p.m. close in Mumbai, the highest since December 2007.

Approvals Sought

Disney will buy a 19.82 percent stake held by the founders, UTV said in the statement. The remaining stake will be purchased from public shareholders. The company’s board today approved Disney’s proposal and UTV will seek permission from the shareholders, it said.

The proposed delisting is subject to regulatory and shareholders’ approvals, Disney said in an e-mailed statement.

“Given the multiple stages and the nature of the process, a successful outcome is uncertain,” Disney said. “In the event Disney is successful in acquiring sufficient outstanding shares of UTV to delist, Rohinton Screwvala, current CEO of UTV, will sell his shares to Disney and become managing director of The Walt Disney Company India.”

Bloomberg TV, owned by Bloomberg LP, is in a strategic partnership with founders of UTV to operate Bloomberg UTV, a 24- hour English language business and financial news network in India.

To contact the reporter on this story: Ketaki Gokhale in Mumbai at kgokhale@bloomberg.net

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net

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