Sony is reportedly contemplating the termination of its merger agreement with Zee Entertainment in India, as disclosed by sources to Bloomberg on January 8.
The proposed merger between Sony Group Corp. and Zee Entertainment Enterprises Ltd. to form a $10 billion media giant in India is currently in a one-month grace period.
While there is no confirmation on the matter, the merger, initially set for December 21, continues to grapple with uncertainties.
Until a week back Sony was said to be considering the requested deadline extension made by Zee in December 2023.
In order to close the merger, it would be important that Zee submits a plan that would complete the pending critical conditions which are imperative for the closure of the merger.
In a past analysis by Storyboard18, experts highlighted that any merger faces three types of roadblocks which could either be requisite approvals by the shareholders and creditors, applicable governmental approvals, and internal agreement or consensus among the parties to the merger.
“As regards the first two roadblocks, they are primarily procedural in nature, therefore, at most be regarded as speed breakers. However, the internal arrangements among the parties to the merger regarding who shall head the merged entity, and under whose flagship the merged entity shall function are bigger concerns which may at times become non-manageable roadblock,” Rajiv Sharma, Partner, Singhania & Co had said.
But for long there has not been mutual appreciation between the parties involved. Particularly concerning the appointment of a leader for the merged entity.
Per the initial agreement, Punit Goenka, MD and CEO of Zee Entertainment Enterprises Ltd (ZEEL), was slated to assume the role of MD and CEO in the merged venture. SPNI (Sony Pictures Networks India) was intended to hold 50.86 percent of the company, Zee’s promoters would have 3.99 percent, and the remaining 45.15 percent was to be allocated to public shareholders.
However, Sony Group Corp has been pushing for its own India MD and CEO, NP Singh, to become the CEO of the newly formed Zee-Sony entity due to stringent corporate governance norms in Japan and the US.