ZEEL Managing Director and CEO Punit Goenka, who is counted among the special guests invited to the consecration ceremony, hinted at the company’s latest developments in a post on X and described them as “a divine sign”.
This comes as Sony Group Corp on Monday said it is calling off the US$10 billion merger of its Indian unit with Zee Entertainment after a standoff over who will lead the merged entity .
Goenka posted, “As I reached Ayodhya early this morning for the auspicious occasion of Pran Pratistha, I got a message that the deal I have spent 2 years imagining and working on has been finalized with my best and most honest efforts. has failed despite.”
“I believe this is a sign from the Lord. I pledge to move forward positively and work towards strengthening India’s leading M&E company for all its stakeholders.”
Also Read: Sony-Zee merger cancelled: Know the complete timeline of the acquisition saga
zee sony merger deal
Sony has sent Zee a notice to end the deal, which was announced more than two years ago, and levied Rs 90 million as a break-up fee for violating the terms of the merger agreement and “invoking arbitration”. Is demanding USD.
In a stock exchange filing on the issue, Zee, on its part, refuted all claims made by Sony and said it was exploring legal remedies. “Zee has demonstrated utmost commitment to the merger by taking several permanent and irreversible steps, which have resulted in significant one-time and recurring costs for Zee,” it said.
The reason for the cancellation of the deal is being said to be a deadlock over leadership. Sony had opposed the demand of Zee Chief Executive Officer Punit Goenka, who was investigated by market regulator SEBI on fraud allegations, to stay on after the merger.
The deal was considered important for both companies to remain in the world’s fastest growing major economy.
The deal will create an entertainment conglomerate with over 70 Indian TV channels, popular Bollywood studios and an extensive film library to rival global powerhouses Netflix and Amazon.
“Sony Pictures Networks India Private Limited (now known as Culver Max Entertainment Limited), a wholly owned subsidiary of Sony Group Corporation, today issued a notice announcing the definitive agreements entered into by SPNI and Zee Entertainment Enterprises Limited relating to the merger. Has been abolished. ZEEL will join forces with and enter SPNI, which was earlier announced on December 22, 2021, the Japanese firm said in a statement.
The definitive agreements provided for closing the merger within 24 months. On expiry of such period the time limit was extended by one month.
“The merger was not completed by the closing date because, among other things, the closing conditions to the merger had not yet been satisfied,” the filing said.
Sony said it was extremely disappointed at not completing the merger terms by the January 21 deadline. The company said it is committed to expanding its presence in India.
In a stock exchange filing, Zee said it had also received a demand for a US$90 million termination fee from Sony over “alleged violations” of the terms of the deal.
“The company categorically rejects all claims and assertions of Sony” and is evaluating all options, Zee said in the filing, “and will take all necessary steps to protect the long-term interests of all its stakeholders, including taking appropriate legal action.” Action is also included.” ,
Zee said it has taken “all efforts and steps” in line with the merger agreement and has continuously worked towards the implementation of the deal.
The Indian firm had seen a decline in its financial performance with profits falling due to rising streaming costs and falling advertising revenues. Zee’s four-year deal with Disney Star for TV broadcast rights of certain cricket events could be in jeopardy after the deal collapse as it will have to pay US$1.32-1.44 billion during the term of the agreement.
The Sony-Zee deal, which got approval from regulators in August, would have created a US$10 billion entertainment giant in which Sony was to hold a 50.86 per cent stake, with Goenka’s family holding 3.99 per cent.
The collapse of the deal will now force Zee to rework its strategy to compete against a giant like Reliance Industries Ltd and the possible merger of the media operations of Walt Disney Co.
Sony will also have to rethink its India strategy as it will no longer benefit from Zee’s deep library of content in regional languages and its bouquet of dozens of television channels.
The merger, which would have created a US$10 billion entity, had already received regulatory approval from NCLT, fair trade regulator CCI, stock exchanges NSE and BSE, the company’s shareholders and creditors.
However, an interim order by SEBI barring Essel Group Chairman Subhash Chandra and Goenka from holding the post of director in any listed company after the market regulator found them siphoning off funds from the company changed the game.
Although the Sebi order was stayed by the Securities Appellate Tribunal, Sony is not comfortable with Goenka leading the merged entity during the investigation due to the strict corporate governance policy in Japan.
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.
Sony planned to invest US$1.575 billion in the merged entity and hold a majority stake. The Chandra family was also free to increase its stake to 20 percent from the current approximately 4 percent.
(With PTI inputs)
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