Tuesday, March 23, 2010

Demerger of Regional channel from ZEE News

Regional channels are getting demerged from zee news and the same is getting mergered with zee tele.

The ratio of merger with zee is 19 : 4 ie the shareholer of Zee news will get 4 shares of Zee tele also he will own the shares of zee news which will have news channel in it.

I expect the base valuation of zee news after demerger to be Rs 20/-. Also the demerger date will be announced soon as the scheme is sanctioned by various courts.

There is an arbitrage opportunity between Zeenews & Zeetele as you can buy zee news befor bookclosure & sell zee tele futures.

Buy ZEE News                 6650           62.50              415625
Sell ZEE tele futures         -1400         265.00             371000

Residual cost of ZEE news   6650                               44625
ie cost of each share is RS 6.72

and I value Zee news post demerger at Rs 20 /-

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