Chennai-based entertainment graphics major Pentamedia Graphics Ltd has announced it will merge three of its wholly-owned subsidiaries into a new company called Penta Entertainment Ltd.

The three firms are Media Dreams Ltd, Kris Srikkanth Sports & Entertainment, and Mayajaal, says a Madras Stock Exchange press release issued yesterday. The stock swap constituted around 9 per cent of the equity of Pentamedia and 3.519 million shares of the company were allotted at Rs 500 per share.

The three companies were acquired by Pentamedia last December through all stock deals totalling Rs 1760 million. Mayajaal offers themed entertainment such as games, multiplexes etc, Media Dreams focuses on studio entertainment such as television, film software and distribution while Kris Srikkanth Sport & Entertainment offers sports entertainment and has a web presence.

The announcement comes in the wake of a controversy that has arisen Pentamedia being unable to put together the finances for acquiring a 49 per cent stake in the US-based Film Roman.

Film Roman has said it is exploring legal options against Pentamedia for breach of agreement after it rejected Pentamedia‘s offer of 5 million GDRs at $2 each in a swap for 8.5 million Film Roman shares at $1.17 for a 49.94 per cent equity stake in the company.

After failing with two alliances (Star TV and Asianet) and struggling to forge a third (for Siticable for the past year), Zee Telefilms chairman Subhash Chandra announced to a well-packed press conference in Mumbai that his company had decided to induct a strategic partner, preferably an international media major. Nothing more was revealed despite several attempts by the journos to put forth probing questions.

He said that the company had taken a decision to invite proposals from leading international investment/merchant bankers to secure this partnership.

"The need is driven by market trends - it‘s driven by the fact partnerships that provide access to capital and technology with access to the global market for programming and syndication can accelerate the process enhancing value creation by enlarging the scope of operating markets and consumers," said Chandra.

Zee Telefilms Corporate head and CEO R.K. Singh added that the company would be open to an alliance with even Sony and Star, if the offer was right. "There are no friends or foes in business. As long as we can enhance shareholder value, we would be open to the strategic partnership."

Chandra added that 60 per cent of ZTL‘s equity was with the promoters, 19 per cent with Indian financial institutions, 7 per cent with Indian financial institutions, 4 per cent with Star TV and the rest with individuals. "We would be looking for management skills in the partner," said Chandra.

Will the markets react similarly? Or will they buy into Chandra‘s current announcement? Watch this space.