Walt Disney (NYSE:DIS) is selling 60% of its India unit to Viacom 18 in a deal valuing the business at nearly $3.9 billion. Viacom18 is owned by Reliance Industries, Paramount Global (NASDAQ:PARA), and Bodhi Tree Systems.
Under the deal, Reliance will own 51% of the unit, Bodhi will own 9%, and the rest will be retained by Disney. According to the Wall Street Journal, Viacom18 will fork out nearly $1.5 billion in cash alongside stock for the acquisition. Following the failed $10 billion merger between Sony (NYSE:SONY) and Zee last month, the Disney deal is one of the most significant developments in the Indian media industry.
Still, the final deal consideration is a far cry from initial estimates. Earlier reports pegged the valuation for Disney’s India assets between $7 billion and $8 billion. At the time, Disney was said to value the unit at roughly $10 billion. While this M&A transaction creates one of the largest media names in India, it also highlights the difficulties in navigating the challenging Indian market. The country has a large population, but most subscribers prefer free offerings or lower subscription prices compared to other countries.
Separately, Disney’s first-quarter results are awaited on February 7. Analysts expect the company to post an EPS of $1 on revenue of $23.75 billion for the quarter. With rising drama in the company’s boardroom, the Q1 earnings will be keenly watched.
What Is a Good Price for Disney Stock?
Overall, the Street has a Strong Buy consensus rating on Disney and the average DIS price target of $103.79 implies a modest 8% potential upside in the stock. That’s after a nearly 7% rise in the company’s share price over the past month.
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