SAM, AZB on $670m Jio-Saavn takeover with 3 US firms

Thursday, 29 March 2018 By Legally India Corporate M&A

“In a deal led by Reliance Jio director Akash Ambani, Reliance Industries today signed an agreement for merging the digital music service Saavn with JioMusic to create a digital media platform with global reach having total value of over $1 billion,” reported PTI.

According to The Hindu, Jio will pay $104m to the existing shareholders of Saavn.

Shardul Amarchand Mangaldas partner Jay Gandhi, principal associates Sayak Maity and Arun Jerome, senior associate Ankit Mishra and associates Pratik Ranjan Das and Divya Hazra acted for Saavn.

US-headquartered Gunderson Dettmer acted for Saavn.

AZB & Partners partners Ashwath Rau and Kashish Bhatia, counsel Jasmin Karkhanis and associates Armaan Patkar, Amitabh Robin Singh and Shruti Baid acted for Reliance Jio.

US firm Covington & Burling also acted for Reliance Jio.

Proskauer Rose acted for the Saavn founders.

Update 12 April 2018: The total deal value was $874m, according to an AZB press release.

Update 9 January 2019: According to a later Economic Times report, the total value of Saavn was $670m.

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Comments

mahabali 29 Mar 2018, 10:40

+3 -5

Ashwath deal size has gone down post CAM.

youngster 29 Mar 2018, 17:34

+1 -1

Whats the role of US law firms in such deals? Are they the ones anchoring the transaction?

yup 29 Mar 2018, 21:32

+1 -0

yea

Misleading 30 Mar 2018, 02:39

+4 -0

The deal value is not USD one billion as you have portrayed in the headline. The combined entity will have a value of 1 billion. Please stop putting misleading headlines to bump up deal values,

kianganz 30 Mar 2018, 05:17

+0 -0

Thanks, you're right of course - have corrected!

Not Misleading 30 Mar 2018, 05:53

Please read the Reliance Industries press release on this, the deal is valued at more than USD 1 billion and USD 104 million is only one leg of the transaction.

kianganz 30 Mar 2018, 09:00

So, I'm struggling a bit with this one. As you may have heard, we're starting an M&A league table soon, but a problem I've had for a while is valuation.

This deal, arguably involves the transfer of $670m implied valuation of Reliance Jio, plus $104m ish in cash paid by Reliance, plus $100m to be invested in the coming years into the JV entity, which would have all affected share swaps, etc.

If you count all the non-cash consideration, then the value would be around $900m, but this would overvalue the value of mergers & JVs vis-a-vis vanilla takeovers by effectively doubling the values.

If you are counting purely cash consideration paid at purchase date, it's around $100m, but that is not necessarily realistic either.

One option I'm considering for league table purposes, is halving the total valuation of the JV entity / total consideration in mergers, to avoid double counting.

What do you guys think?

Anon!! 31 Mar 2018, 05:40

Check the MM guidelines. They have good reporting criteria around JVs and mergers, as in the attributable value for the transaction.

kian - please correct 5 Apr 2018, 10:33

104 Million is incorrect and misleading. It ignores the business transfer and other aspects of the deal. This is clear from the Hindu article itself -

"As [PART] of the deal, [ADDITIONALLY], Reliance will be acquiring a partial stake from the existing shareholders of Saavn for $104 million."

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