Punit Goenka-led Zee Entertainment Enterprises Ltd (ZEEL) has urged Sony to immediately withdraw its merger termination notice and honour its obligations to implement the deal between the two entities.
After two years of negotiations, on January 22, 2024, Sony called off the merger over alleged breaches by ZEE, the latter has now asked the National Company Law Tribunal (NCLT) in Mumbai to order Sony to close the $10-billion merger. The Indian company also contested Sony’s claims that it breached its obligations in the merger pact before the Singapore International Arbitration Centre. Sony had moved the Singapore tribunal seeking $90 million as termination fees for Zee’s failure to fulfill the merger conditions.
Read More: Zee approaches NCLT post Sony’s merger termination notice
Zee denied that Sony is entitled to terminate the merger agreement and said that its demand for a termination fee is legally untenable. ZEE has approached the NCLT “seeking directions to implement the merger”. As per reports quoting sources, Zee and Sony individually as well as jointly didn’t fulfill 22 merger conditions.
In what could spell more problems for Goenka and his father Subhash Chandra The Securities and Exchange Board of India (SEBI) has been investigating Essel Group companies and Zee Entertainment.
Sources aware of the development informed that the market regulator has established Punit Goenka’s role in siphoning off funds as Key Managerial Personnel (KMP) in various Essel entities.
As per sources, in the first phase of its investigation, SEBI found misuse of funds to the tune of ₹200 crore from Zee Entertainment, benefiting the promoter family. However, now, according to sources, the size of the violation has escalated to around ₹800-₹1,000 crore.
As part of its final order, SEBI could consider imposing a monetary penalty on Punit Goenka and Subhash Chandra Goenka.
Read More: What was Zee promoter Subhash Chandra’s plea to FM before merger fallout with Sony?
Subhash Chandra, chairman of Essel Group and promoter of Zee Entertainment, even wrote to Finance Minister Nirmala Sitharaman, expressing concerns about perceived efforts to sabotage the merger and sensationalize the ongoing investigations.
In a letter to the FM, sent six days before Sony called off the merger, Chandra wrote, “While Zee and the people have been cooperating with Sebi on its investigation related to alleged fund diversion by promoters, the timing of a new notice issued by the regulator to former directors, matching with the deadline of the merger, raises concern.”
He added, “I’m not suggesting that Sebi should not investigate if they have doubts of any kind… issuing a notice at this stage appears to be an exercise to sensationalise the matter.” Chandra further said: “If the mentioned parties continue to influence the investigations, especially by Sebi, it will lead to a huge financial loss for the company’s minority shareholders.”
Days after Sony terminated the merger deal with Zee, NP Singh, CEO of Sony Pictures Networks, expressed optimism about the days ahead, in an internal communication.
“As we close the chapter on our proposed merger with ZEEL, I want to take a moment to talk to you – not just as your CEO but as someone who has been on this journey with you. This change in our plans allows us to step into a new phase of our story, which I believe is full of promise,” he said in the mail seen by Storyboard18.
Read More: Sony CEO NP Singh reveals bold plans after Zee merger fallout, promises new era of growth