Zee Entertainment and Sony Group Corporation are all set to go ahead with their $10 billion merger yet again, two years after it was called off. Representatives of the two sides have held meetings in Mumbai with an aim to resolve key differences and reach an agreement within the next 48 hours.
$300 Million Hurdle
The biggest obstacle appears to be the $300 million writeoff on cricket rights. Sony wants it quickly, while Zee prefers to delay it. There is also a tussle over leadership, with Zee CEO Punit Goenka reportedly giving up his claim to the top spot in exchange for an advisory role – although Sony is keeping him out of the core structure. The report further adds that adding another layer of complexity, Zee wants any deal to be legally reversible, a proposal that Sony, wary of unpredictable financial changes, is reluctant to make.
With a decision expected soon, the two sides find themselves at a crossroads. Encouraged by recent earnings improvement, Zee is confident about its future even if the merger fails. However, a successful deal could unlock synergies, extend their digital reach and create a formidable Indian media giant.
The clock is ticking. Failure to fix the flaws could lead to Sony’s exit, and Zee will be left alone to decide its future. However, the settlement will not be without challenges. The legal battle launched by the two companies would need to be withdrawn, which would add another layer of complexity to an already complex puzzle.
Both the companies have taken their grievances to legal forums such as Singapore International Arbitration Center (SAIC) and National Company Law Tribunal (NCLT). Zee sought the NCLT’s intervention to implement the merger by Mad Men Film Ventures, while Sony challenged the maintenance of Zee’s application by its Indian units and sought a stay of execution. In addition, Sony sought emergency interim relief from SIAC against Zee, which was denied.
Shares of Zee Entertainment Enterprises Ltd rose more than 7% on Tuesday after reports the company is seeking to review its $10 billion merger talks with Sony Group. People familiar with the development told NDTV Profit that lawyers are busy in talks but the ball is in Sony’s court to push the merger forward. However, the deadlock continues, the people said.
Earlier, a media report said the two companies are trying to salvage the deal. On Jan. 22, the merger between Zee Entertainment Enterprises Ltd. and Sony Group’s India unit, Culver Max Entertainment, was called off, causing a significant loss in the former’s stock price.
Reports suggest Zee and Sony are attempting to iron out differences to salvage the $10 billion media merger. It is expected that Zee will communicate its final decision to Sony within the next 24-48 hours, indicating whether they accept all terms and conditions of the agreement.
The two-year-old Zee-Sony merger continues with yet another twist in the story. After the dramatic events of January 2024, in which the merger collapsed, reports now suggest that Zee and Sony are trying to iron out differences to save the $10 billion media merger.
According to an ET report, Zee Entertainment Enterprises (ZEEL) has teamed up again with Sony Group Corp in a last ditch effort to revive their merger, which was officially called off on January 22, the day of the inauguration of the Ram temple. Ayodhya.
CEO Punit Goenka had earlier said in ZEE’s recent analyst call: “I definitely wanted to execute the merger. In line with this ambition, we also took several steps towards divestment or closure of profitable businesses in domestic and international markets. I personally met Sony with their demands.” Many proposals and solutions were offered to address this, but unfortunately, they remained unaccepted. As the matter is sub judice, I do not wish to say more and let the law take its course.”
- Zee Entertainment Enterprises (ZEEL) shares surged 12% to Rs 199.85 on BSE
- Reports suggest ZEEL and Sony Group are in discussions to save $10-billion merger
- Meetings have been held in Mumbai over the last 15 days
- Stock was up 9% at Rs 194.5 per share at 2:35 PM
- Average trading volumes on the counter doubled with 66.64 million equity shares changing hands
- Stock price of ZEEL has recovered 28% from a low of Rs 155.90 on January 23
- Punit Goenka, MD and CEO of ZEEL, agreed to Sony’s demand of not becoming CEO of merged entity
