Eros International's shares grow by 10% on the merger with STX Entertainment in Hollywood

Eros International's share price soared 10 % in morning trading on April 20 after the company announced an all-share merger with Hollywood's STX Entertainment to create a globally equally-held entertainment business.

The six-year-old, privately owned STX has made 34 movies including 'Hustlers' and 'Bad Moms' which have cumulatively grossed $1.5 billion, while Eros focuses mainly on the Indian and diaspora markets by making films and distributing them via an OTT Platform.

According to Pradeep Dwivedi, chief executive of Eros International Media, the merger, which comes at a time when the entire film production sector is shut in major global markets due to the COVID-19 pandemic, would see STX integrate into the NYSE-listed Eros International (which is also the holding company of the Lullas-promoted Eros Group) and create a $1 billion valued enterprise.

Existing shareholders of Eros and STX will each own approximately 42 % of the combined company, while the remaining 15 % will each be new shareholders, Pradeep Dwivedi, chief executive of Eros International Media, adding that current investors, including TPG, Hony Capital and Liberty Global, are raising fresh capital of $125 million.

A merger between the two companies would bring together talent from Bollywood and Hollywood, leading to collaboration on ventures and shared exposure to China's mega market, Dwivedi said. In addition to market access, the deal would also give the company additional financial heft, Dwivedi said, adding the revamped capital base has led JP Morgan to open a $350 million loan facility.

Over the last 15 days, the stock price has risen by 91 % and its upper circuit. It quoted Rs 16.35, up Rs 1.48, or 9.95 percent. It hit a Rs 16.35 intraday high and a Rs 16.35 intra-day low. There were pending purchase orders for 242.988 shares, with no sellers.