Both companies have already filed the scheme of merger with the Mumbai bench of the National Company Law Tribunal (NCLT). The division bench of judicial member Reeta Kohli and technical member Madhu Sinha is hearing the matter.
The companies are seeking to restructure their streaming, broadcasting, and distribution businesses.
In their application, Star and Novi stated that the move would help them achieve economies of scale, enable synergies, increase operational efficiencies, put a greater emphasis on growth, make the best use of resources and lower costs.
In meetings held on February 8, 2023, the boards of both Star and Novi Digital accepted the merger plan with April 1, 2022, as the effective date.
“Both the companies, Novi Digital and Star India are unlisted entities, hence they will have to face relatively lesser compliance compared to such transactions for listed companies,” said Faiza Dhanani, partner of law firm Cue Legal. “Apart from shareholders’ approval, the companies will have to seek approval from the tax authorities, lenders and sector regulators while the adjudicating authority is still hearing the case.”The development takes place as Walt Disney searches for strategic buyers for Star India.Walt Disney has approached Reliance Industries and private equity firm Blackstone for a partial to full sale of Star India, which has a significant presence in linear TV and streaming businesses, ET has reported.
As directed by the NCLT, Star and Novi Digital have served notices to the Ministry of Corporate Affairs, Registrar of Companies, Income Tax Authority, Ministry of Information and Broadcasting, Reserve Bank of India and others on the merger plan.
As per the FY22 filings of Novi Digital, sourced through Tofler, Star India owned a 78.07% stake in the company, while Star US Holdings LLC held the remaining 21.93%.
In FY22, Novi Digital recorded 93% growth in revenue at Rs 3,220 crore and a loss of Rs 343 crore, which was 43% lower compared with the previous year.
Novi Digital sold its US business to Walt Disney-owned Buena Vista Video on Demand for Rs 178.13 crore in FY22. Disney+ Hotstar, which was called Hotstar in the US, exited the market in 2021.
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