Silver Eagle Acquisition Corp, a special purpose acquisition company set up by media veterans Harry Sloan and Jeff Sagansky, is to acquire a stake of up to 38.6% in Indian satellite television broadcaster Videocon d2h.
Silver Eagle will pay at least…
Silver Eagle Acquisition Corp, a special purpose acquisition company set up by media veterans Harry Sloan and Jeff Sagansky, is to acquire a stake of up to 38.6% in Indian satellite television broadcaster Videocon d2h.
Silver Eagle will pay at least US$303.7m in cash for new equity shares of Videocon d2h, which will take the form of American Depositary Shares (ADSs). The SPAC will end up with a holding of between 33.5% to 38.6% in Videocon d2h, depending on the number of Silver Eagle shares that are redeemed by its public stockholders in connection with the transaction.
The current shareholders of Videocon d2h, who are all members of the Videocon Group, will also be entitled to be issued additional equity shares the company. These will amount to 3.88% of the post-closing issued share capital of Videocon d2h, although the issuance size is subject to the company achieving certain trading price targets over the next three years.
Upon consummation of the transaction and distribution of the ADSs, Videocon d2h intends to apply to list the ADSs on the NASDAQ stock exchange. The deal will result in the first US-listed Indian pay-TV operator.
Commenting on the investment, Silver Eagle’s chairman Sloan stated: “We created Silver Eagle for the purpose of finding a fast-growing media opportunity which is taking full advantage of the digital revolution. With almost 10 million digital subscribers, this well-managed company has passed the inflection point to become a leader in India’s explosive television growth.”
Sagansky, who is the company’s CEO, added: “Videocon’s DTH business is in what we believe to be the fastest growing segment of the media industry in India in part because of the government’s ongoing mandatory digitization plan in addition to millions of Indian homes subscribing to pay TV for the first time. Together there is an expected 33 million new pay-TV subscribers over the next four years and we are pleased to become part of Videocon d2h’s dynamic growth story.”
Videocon d2h began offering DTH services in July 2009 and has since grown to a gross subscriber base of 11.8 million, representing 16.5% of the Indian DTH market as of 30 September 2014. The company was the first to offer HD channels in the country and now distributes over 500 digital television channels.
Videocon has been eyeing an initial public offering of its DTH unit since late 2012 with the intention of selling a minority stake in order to fund its expansion plans and better compete in the crowded Indian DTH market where there are eight players.
In March 2013, Videocon received approval from the market regulator to go ahead with a proposed Rs7bn (US$117.2m) listing but the process was put on ice because of poor market conditions.
The plan was then revived in mid-2014 with Axis Capital mandated to manage the flotation. This has ultimately led to its deal with Silver Eagle.
For Sloan and Sagansky, the deal is reminiscent of how they formed their in-flight broadband and content provider Global Eagle Entertainment in late 2012.
In that deal, the two media veterans had established a SPAC called Global Eagle Acquisition Corp which subsequently acquired satellite-based in-flight broadband provider Row 44 and German in-flight entertainment solutions firm Advanced Inflight Alliance (AIA) for around US$430m.
The two were then merged into a new entity, Global Eagle Entertainment, which used the SPAC’s registration to list on NASDAQ.
