Reliance Industries Limited (NSEI:RELIANCE) (RIL) and The Walt Disney Company (NYSE:DIS) have signed a non-binding term sheet in London last week to move ahead with plans to create country's largest media and entertainment business if the deal goes through. The 51:49 stock and cash merger in favour Mukesh Ambani-led group is expected to get finalised to complete all commercial ratifications and regulatory approvals by February even though Reliance is keen to wrap it up even earlier by January end, said people in the know. Kevin Mayer, a former Disney executive brought back in July by Chief Executive Officer Bob Iger as an adviser to help him navigate the company's legacy television business and the ESPN sports network and Manoj Modi, a close confidante of Ambani, were among those present in the meeting.

Both have been negotiating for months now to finalise the term sheet document. Following last week's signing confirmatory due diligence, valuation exercise by independent valuers will officially begin and legal and tax advisors brought on board. There is likely to be a 45-60 day exclusivity that can be mutually extended.

The development comes even as the fate of the $10 billion merger between Zee Entertainment Enterprises Limited (NSEI:ZEEL) and Sony Group Corporation (TSE:6758)?s local unit, the biggest in India media amalgamation announced till date - hangs in balance even after two years. ET was the first to report about the proposed RIL-Disney term sheet in its December 12th edition. A Disney India spokesperson declined to comment.

Mails sent to Reliance on December 23, 2023 evening did not generate a comment till press time December 24, 2023. The plan, as of now, is to create a step-down subsidiary of RIL's Viacom18 (Viacom 18 Media Private Limited), which will absorb Star India (Star India Private Limited) via a stock swap, said the people cited above. Reliance is pitching to be the larger shareholder with at least 51% in the merged company with Disney owning the residual 49%, they said.

Both businesses are being treated as similar-sized ones, so RIL is likely to pay cash for the controlling stake. Jio Cinema, a part of Viacom 18 will also be included in the deal. The two sides are also negotiating a business plan to inject cash as immediate capital investment, expected to be $1 billion - $1.5 billion.

The final shareholding structure of the entity will get crystallised and its value established based on the cash infusion from each of the parties.