It has been more than a year and a half since the announcement of the Zee-Sony merger. Ever since, the proposal has faced numerous challenges, including regulatory hurdles and allegations of financial impropriety. However, it appears that the deal is now significantly closer to completion. Experts anticipate the deal to be finalised by the end of the fiscal year.
“SONY Pictures Network India (SPNI/Sony) and Zee Entertain Enterprises Limited (ZEEL/Zee) merger continues to create a lot of buzz in the current global media and entertainment sector, and this anticipated merger is likely to be completed by the end of March 2024,” said Shivani Bhushan, senior associate at boutique law firm TAS Law.
Talking about the financials, Bhushan said the combined entity is expected to have a market capitalisation of Rs 50,000 crore.
“Both ZEEL and SPNI have exchanged the non-binding term sheets, as per which both the entertainment network giants will combine their linear networks, digital assets and production operations to create a common pool for the new merged entity. Both ZEEL and SPNI will have a 90-day time limit to conduct due diligence of each other through data rooms,” Bhushan added.
However, the leadership of the newly merged entity remains uncertain. As things stand, Punit Goenka, who was initially slated to lead the company, will not be able to assume the role.
The Securities Appellate Tribunal (SAT) had refused to stay the Securities and Exchange Board of India’s (SEBI) interim order barring ZEEL CEO Goenka and Essel Group Chairman Subhash Chandra from holding key positions in listed entities. The interim order had been passed by SEBI after investigations revealed that Chandra and Goenka had allegedly engaged in the diversion of funds from ZEEL through complex transactions involving multiple entities.
“The SAT’s decision to refuse a stay on SEBI’s order indicates that, as of date, until any contrary orders are passed, there continues to be substance and merit in SEBI’s allegations and that Chandra and Goenka, for the time being, as deemed fit by SEBI in light of its interpretation of facts and circumstances of the matter, should be temporarily restrained from holding key positions in listed entities. It is important to note that this decision is a refusal to grant an interim relief in the form of stay order prayed for by the party against whom the proceedings have been initiated. It is sub judice and the orders are yet to be passed,” explained Aditya Chopra, managing partner at another boutique law firm, Victoriam Legalis.
The final outcome of the case is yet to be determined.
This also has led to creation of an interim committee to ensure the smooth day-to-day operations towards the merger.
Interestingly, the matter has also been heard by the National Company Law Tribunal (NCLT), which has reserved its orders. All eyes are on how the order unfolds, when it does.
“A merger is evaluated on several counts, such as support of various stakeholders to the scheme, including that of shareholders of the merging entities, creditors, and the submissions of various regulatory authorities. Such support by the stakeholders would be a key point of consideration by the NCLT,” said Saurabh Tiwari, Partner, DSK Legal.
Meanwhile, around mid-July, Goenka penned an email to his staff, assuring them that the planned merger with Sony has reached an advanced stage. He emphasised that the challenges faced by the company’s promoters would not hinder the progress of the deal.
Goenka reportedly stated in the email that employees shouldn’t focus on his personal circumstances but rather on the destiny of the company that will only be brighter following the merger with Sony.