Zee working towards 'successful closure' of merger with Sony

New Delhi: Zee Entertainment on Tuesday said it is 'committed' to the merger with Sony Pictures Networks India and is working towards a 'successful closure' of the transaction that will create the country's largest media house worth $10 billion.

The deadline of completion of the merger with Sony Pictures, now known as Culver Max Entertainment Private Ltd (CMEPL), has been extended for a month till January 21 after Zee Entertainment Enterprises Ltd (ZEEL) sought an extension under the Merger Cooperation Agreement signed between them two years before.

"We wish to reiterate that the company is committed to the merger with Sony and is continuing to work towards a successful closure of the proposed merger," ZEEL said in a filing to the stock exchanges.

The filing was submitted in response to a clarification sought by the bourses on reports that Sony might call off the deal.

The Merger Cooperation Agreement between the two parties was signed on December 22, 2021.

On December 17, 2023, the Subhash Chandra family-promoted ZEEL sought an extension in deadline for completion of the merger from Sony Group Corporation (SGC) firm CMEL and Bangla Entertainment Pvt Ltd (BEPL) under the agreement. Subsequently, the deadline, which was to end on December 21, 2023, was extended by a month.

According to industry sources, the fate of the $10 billion-merger is hanging by a thread, with the two parties yet are unable to finalise an agreement as the end of the one-month grace period looms.

The parties are yet to come to an agreement over MD and CEO Punit Goenka leading the merged entity as Sony has expressed concerns after market regulator Sebi barred him from holding managerial posts at Zee group entities in connection with a fund diversion case.

While Sebi's order has been stayed by the Securities Appellate Tribunal, Sony is not comfortable with Goenka leading the merged entity due to the stringent corporate governance policies that are followed in Japan.

The contentious issue for the completion of the deal is not just about Goenka leading the merged entity but also about how the Indian firm is able to meet the other closing conditions, an industry source.

The proposed merger of ZEEL, BEPL and CMEPL has already received regulatory approvals from the fair trade regulator CCI, bourses NSE and BSE, shareholders and creditors of the company.

In August last year, the Mumbai bench of the National Company Law Tribunal (NCLT) also gave a go-ahead to the merger.

According to reports, the bone of contention between ZEEL and Sony is about who should lead the merged entity.

Under the agreed terms and conditions, Goenka is to lead the merger entity. However, Sony Group is insisting on making way for its Sony Pictures head N P Singh, as per the reports.

The majority of the board of directors of the combined entity would be nominated by the Sony Group.

The combined entity will own over 70 TV channels, two video streaming services (ZEE5 and Sony LIV) and two film studios (Zee Studios and Sony Pictures Films India), making it the largest entertainment network in India.