Japan’s Sony Group has launched a legal battle claiming a $90 million termination fee after canceling its merger with Zee Entertainment on January 22. Zee told Indian stock exchanges that Sony was seeking termination fees and emergency interim relief for alleged violations of the merger agreement. Call for mediation”

Zee said that it refutes all the claims made by Sony and will take appropriate legal action.

“Sony has called for arbitration to refer its disputes under the merger, which means both parties will go through the arbitration process to resolve their disputes under the merger.” moncontrol Dheeraj Mhetre, partner at Khaitan Legal Associates, has been quoted as saying.

“Zee will defend Sony’s claims in the arbitration, including a $90 million claim for termination fees.”

Although neither Sony nor Zee on Monday said what conditions were not met, the standoff over who would lead the combined company had put the merger in jeopardy.

Zee had proposed that CEO Punit Goenka take over, but Sony declined to do so after it became the subject of an investigation by India’s market regulator. However, Zee said on Monday that Goenka had “agreed to step down in the interest of the merger”.

‘A sign from the Lord’

Goenka, who was in the Indian city of Ayodhya to attend the grand opening of Lord Ram temple, wrote on We will move forward by strengthening our company. ,

Meanwhile, Zee said it has taken several steps towards the Sony deal which resulted in “one-time and recurring costs”, but will now “continue to evaluate organic and inorganic opportunities for growth.”

With channels in areas such as news and entertainment in Hindi and other languages, Zee has been a household name in India for years. It was founded in 1992 by Goenka’s father Subhash Chandra, often referred to as the “Father of Indian television”.

Sony, which also has entertainment channels and a streaming service in India, could have teamed up with Zee to create a portfolio of more than 90 channels.

The news agency said, “The failure of the Zee-Sony merger will be disappointing for shareholders – this merger had the potential to significantly change the dynamics of the industry.” reuters Hetal Dalal, president and chief operating officer of Institutional Investor Advisory Services, was quoted as saying.

Sony said it does not expect any material impact from the omission of its estimates for the year ending in March because it has not factored its outlook into the deal.

sony zee deal

Sony Group Corp on Monday said it is calling off the US$10 billion merger of its Indian unit with Zee Entertainment amid a standoff over who will lead the merged entity.

The entertainment giant sent a termination notice to Zee over the deal, which was announced more than two years ago, and levied USD 90 million as break-up fees for violating the terms of the merger agreement and “enforcing arbitration”. Is demanding dollars.

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. After this period expired, 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.

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 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 changed the game after the regulator later found that they were siphoning off funds from the company.

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 agency input)