Financial Daily from THE HINDU group of publications
Tuesday, Dec 16, 2003
Financial Daily from THE HINDU group of publications Tuesday, Dec 16, 2003 |
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Corporate
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Mergers & Acquisitions Zee Tele arms to merge — Plans southern music channel Our Bureau
Mumbai , Dec. 15 THE board of directors of ETC Networks Ltd on Monday approved an in-principle merger with Econnect India Ltd (Econnect). Both the companies are subsidiaries of Zee Telefilms Ltd (ZTL). The board of Zee Tele, which gave its nod to this merger, has also approved the merger of all its Mauritius-based subsidiaries into a single operating company, Asia Today Ltd, Mauritius. At present, there are six companies located in Mauritius. Deloitte Haskins and Sells have been appointed to carry out a detailed valuation and suggest a suitable exchange ratio in the ETC-Econnect merger. Econnect is engaged in the business of maintaining web portals of Zee Group and independent companies. Earlier, the company was in the business of providing IT solutions, maintaining B2B, C2C web portal and offering Internet services. However, with the global downturn of IT business, Econnect substantially reduced its operations. ETC, on its parts, plans to launch a music channel in southern languages. "So far it does not have any organisational capabilities in southern States. Setting up of independent offices would have required time and additional capital outlay, which would have adversely affected its existing operations and acquisition of knowledge, would have been time consuming," the company said in a release. The proposed merger of ETC and Econnect would enable ETC to embark upon its plans for the southern markets without much delay or additional outlay. Further, ETC's plans to launch an interactive entertainment portal would get an immediate kick start on combining these two entities. The merged entity is expected to improve its financial performance as compared to the stand-alone financials of the companies in view of the fact that the bulk of accumulated losses of Econnect were recently written off against reduction of its capital. "The merger will enable ETC to expand its business operations in an economical way and Econnect's existing resources, expert manpower and latest machines would be exploited to the benefit of merged entity," the release said, quoting Mr Jagjit Singh Kohli, CEO, ETC Networks Ltd. The merger is likely to go through within a period of 5-6 months. The equity shares of the merged entity would continue to be listed on BSE and NSE. The six ZTL companies based in Mauritius are Software Suppliers International Ltd, Zee Telefilms International Ltd, Zee MGM, Expand Fast Holding Ltd, BVI and Asia TV (Africa) Ltd.
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