UTV Set To Buy Adobe's 6.29% In Indiagames; Disney Makes Delisting Offer For UTV

Mumbai-based UTV Software Communications Ltd, has struck a deal to buy out Adobe Systems Incorporated's 6.29 per cent stake in Indiagames Ltd, the country's largest digital gaming company.

Although the deal value stands undisclosed, the agreement for sale has already been inked. If the recent deal is taken as a benchmark, UTV will pay around Rs 20 crore to Adobe to raise its holding to 92.31 per cent, according to VCCircle estimates.

UTV currently holds 56 per cent in Indiagames. In October this year, the company disclosed that it had signed an agreement to acquire 30.02 per cent in Indiagames for Rs 94.56 crore from founder-promoter Vishal Gondal and other employee-shareholders. The transaction, yet to be completed, will push UTV's holding in the company to 86.02 per cent.

Soon after the October announcement, UTV also struck an agreement to buy Adobe's minority stake in Indiagames. It is also in talks to acquire the balance 7.69 per cent held by Cisco Systems which will make the gaming company a wholly owned arm of UTV.

Cisco and Adobe (through Macromedia) had acquired the stake for just around $4 million nearly six years ago. Therefore, they will more than double the value of their investments.

Also read our earlier in-depth report on Indiagames, including its financial performance and valuation down the years.

Disney Open Offer For UTV

Disney had earlier said that it would make an open offer to other shareholders of UTV Software to take the media & entertainment firm private.

On Wednesday (Dec 28), it announced a formal open offer for delisting UTV. The open offer is for buying around 30 per cent stake held by minority shareholders for up to Rs 1,000 a share. Disney already has an agreement to buy out around 20 per cent stake held by the original promoter group that includes Rohinton (Ronny) Screwvala, Unilazer Exports and Management Consultants, Unilazer (Hong Kong) and Zarina Mehta. While these promoters will not participate in the delisting offer, they will also exit the firm if the delisting offer is successful.

Assuming an exit price of Rs 1,000 per share (Disney has mentioned this as the maximum it is willing to pay), Disney will have to spend over Rs 1,400 crore to buy 29-30 per cent stake held by public shareholders, including convertible securities. With the buyout of the remaining promoters, the overall deal size might be around Rs 2,150 crore at the same share price.