Shop CJ may merge with HomeShop18

MUMBAI: HomeShop18, part of Mukesh Ambaniowned Network18 Media & Investments, and Shop CJ Network -an equal joint venture (JV) between private equity investor Providence Equity Partners and Korean firm CJ O Shopping -are in talks to merge operations. Sources with direct knowledge of the development told ET that the due diligence is on and the deal size is expected to be anywhere between $150-200 million.
“Providence, which had picked up 50% stake in the Shop CJ (then Star CJ Network), is looking for an exit from India, and demonetisation has hit the home shopping business badly,“ said a highly placed source on condition of anonymity.“The talks are at an advanced level and if all goes well, it could be announced in next 3-4 months. HomeShop18 will control the merged entity.“

After the merger, Providence will exit, and CJ O Shopping would cut its stake, said another source.He added that a Big 4 firm is set to conduct the due diligence. India's home shopping market, worth about . 4,000 crore, suffered a set ` back last year after demon etisation, as it is a cash-on delivery market.

ET first reported on De cember 13 that celebrity couple Shilpa Shetty and Raj Kundra-owned Best Deal TV suspended oper ations due to the cash crunch after demonetisa tion. DEN Networks, which ran DEN Snapdeal TV Shop in partnership with Snapt deal, also exited earlier this month. Launched in April 2008, Homeshop18 was In dia's first 24-hour home shopping channel..

It posted a loss of ` . 84.2 crore in FY16 on sales of s . 390.4 crore. As of Septem ` ber 2016, it had a cumula tive customer base of 19.9 million, across 1,662 loca tions.

In its investor presenta tion for 2Q FY17, Network18 s said that HomeShop18 .

pulled down profitability .s Earlier in January , the company had laid off about 200 employees as part of t “cost-cutting“ measures.