According to a report, Walt Disney Co and Reliance Industries (RIL) are in the final stages of negotiations to solidify a substantial stock-and-cash merger, aiming to establish India's largest media and entertainment conglomerate. With the exclusivity period for negotiations scheduled to conclude on February 17, both entities are intensifying efforts to iron out the specifics of the deal.

Sources cited in the ET report suggest that Viacom18 is poised to become the primary shareholder in the merged entity, potentially securing a significant 42-45 percent stake. Additionally, RIL, the parent company, is expected to infuse up to $1.5 billion in cash into the venture, securing a direct ownership stake. Overall, it is anticipated that the Mukesh Ambani-led conglomerate will hold a majority 60 percent share, while Walt Disney will retain the remaining 40 percent.

Apart from ongoing negotiations, RIL executives are crafting a comprehensive three-year capital allocation strategy that encompasses all sectors of the business, with a particular focus on the media division's role in driving future growth initiatives.

As per the current proposal, the plan involves establishing a subsidiary of Viacom18 Media to absorb Star India through a stock exchange agreement. Both entities are being evaluated similarly, with estimated values ranging between $4-5 billion each. It is also expected that Jio Cinema, a component of Viacom18, will be integrated into the deal.

Analysts have attributed a decline in Disney's valuation of its Indian operations to mounting losses within its sports franchise, notably due to challenges surrounding the ICC Men's Cricket World Cup 2023 in India. Despite this setback, Disney+Hotstar, the company's video-streaming platform, recently witnessed a surge in paid subscribers following a period of decline post the loss of digital rights to the Indian Premier League (IPL).

Disney CEO Bob Iger has expressed optimism regarding the company's trajectory, citing recent earnings results as evidence of a promising shift. However, Disney has faced proxy battles with investors seeking changes to enhance shareholder value.

Despite challenges, Disney's stock witnessed a significant 11.5 percent surge on February 8, reaching a one-year-high, driven by better-than-expected financial performance and shareholder-friendly initiatives. Looking ahead, Disney's strategic investments, including a $1.5-billion partnership with Epic Games, signal its intent to expand into the evolving gaming sector. As negotiations between Disney and RIL near conclusion, stakeholders anticipate the formation of a board-managed company, with RIL holding a majority share.