InvestorQ : In an IIFL securities article 'WILL THE ZEE SONY MERGER BE A WIN-WIN DEAL?', a statement says- per relative valuations Zee will have 61.25% stake and another says per term sheet Zee will have only 47.07% share. What am I failing to understand here?
rishabh duara made post

In an IIFL securities article 'WILL THE ZEE SONY MERGER BE A WIN-WIN DEAL?', a statement says- per relative valuations Zee will have 61.25% stake and another says per term sheet Zee will have only 47.07% share. What am I failing to understand here?

Answer
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2 months ago
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If you read the two paragraphs, the point is self explanatory. Let me explain...

1. As per current valuations of Zee and Sony Pictures, Zee should be having a 61.25% stake in the combined entity. That is if you just consider the swap ratio between the two companies.

2. However, Sony will infuse $1.5-$2 billion into the venture while Zee will not bring anything. To compensate for the cash brought in by Sony, They will get the larger share in the merged entity and Zee will only get 47.07%.

Trust that answers your query.

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