As the merger deadline between Zee and Sony approaches on December 21, expectations were high for the announcement of the new leader of the combined entity this week. However, with no final decision in sight, speculations about a possible deadline extension have emerged. All eyes are now on the company’s Annual General Meeting (AGM) scheduled for Saturday, December 16, at 4:00 pm.
Adding to this, the last two days saw new developments, including the departure of Adesh Kumar Gupta, a non-executive non-independent director, from the board, citing personal reasons. This unexpected move caused a brief market volatility, leading to a 9 percent dip in shares of ZEE Entertainment Enterprises Ltd (ZEE). Nonetheless, the stocks recovered most of the losses as the day progressed.
Speculation has been rife among stakeholders about a potential shake-up in the leadership arrangement for the Zee-Sony merger.
As per the original agreement Punit Goenka, MD and CEO of ZEEL was to take over as the new head of the merged entity. The arrangement was for Sony Pictures Networks India (SPNI) to hold 50.86 percent , Zee’s promoters 3.99 percent, and the remaining 45.15 percent was to be allocated to the public shareholders.
However, Sony Group Corp started advocating for its India MD and CEO, NP Singh, to assume the CEO role in the newly formed Zee-Sony entity.
This shift is attributed to stringent corporate governance norms in Japan and the US, according to Sony.
Sources close to the matter suggest that Sony may persist with this proposal, considering Goenka lacks the approval of the Securities and Exchange Board of India (SEBI), despite the Securities Appellate Tribunal (SAT) clearing him for the CEO position in the merged entity.
In August, shortly after the NCLT’s approval of the Zee-Sony merger, SEBI issued an order preventing Zee promoters Punit Goenka and Subhash Chandra from taking significant management roles in Zee Entertainment Enterprises Ltd and related companies. SEBI’s order, while addressing regulatory concerns, also questioned Goenka’s role as managing director post-merger, citing ongoing proceedings.
SEBI’s final decision in this matter is expected within eight months from August.
The leadership tug-of-war between Goenka and Singh in the Zee-Sony merger highlights the complexities and challenges inherent in large-scale corporate mergers, according to experts.
The future for the company will hinge on how effectively it can blend the strengths of both organisations under a leadership that is not only visionary but also grounded in ethical and effective governance practices.