How a merger between two broadcasters survived news of a loan default and a US$4.3b debt. Rebecca Abraham reports

On 18 April the promoters of Dish TV India, a Bombay Stock Exchange-listed company that provides direct-to-home (DTH) broadcasting services, launched an open offer for a 26% stake in the company.

This was the latest step in a drawn-out saga that began in November 2016, when the boards of Dish TV and Videocon d2h – which had listed on the Nasdaq in March 2015 – approved the amalgamation of Videocon d2h with Dish TV. It was to be the first consolidation in the DTH sector.

Soon after the announcement of the all-stock merger, Saurabh Dhoot, the executive chairman of Videocon d2h, cautioned that while the “combination creates large scale”, it would not have a dominant position in the DTH market. He said the merged entity, which would be named Dish TV Videocon, would have close to 30 million net subscribers out of a total of 175 million households with televisions in the country.

DARK CLOUDS

As is typical in schemes of amalgamation that require court approval, the merger between the two companies was completed only a year-and-a-half later, on 22 March. It required approvals from the National Company Law Tribunal (NCLT), the Competition Commission of India (CCI), the Securities and Exchange Board of India and the Ministry of Information and Broadcasting.

Since it involved a Nasdaq-listed company, the merger also needed to meet certain requirements of the US Securities and Exchange Commission. Shepherding companies through a court-driven process of a scheme of amalgamation is a challenge. In this instance, the legal advisers had the added challenge of advising on a transaction that in its final stages saw storm clouds gather over one of the parties.

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