Zee Sony Merger: On January 23, the stock of Zee Entertainment Enterprises plummeted by 30.50%, experiencing a continuous series of lower circuits throughout the day and reaching its lowest point in 52 weeks at Rs 152.50.
Foreseeing a significant decline in Zee’s value, several brokerages, including the global firm CLSA, downgraded the stock. CLSA specifically projected a decrease in valuation from 18x to 12x following the termination of the merger. Delivering right onto Citi’s concerns, the sharp decline in Zee’s stock wiped out all the gains it had accrued since August 2021, when the merger plans with Sony Pictures were initially disclosed.
By the closing bell, Zee concluded the trading day with a 30.50 percent decrease, settling at Rs 160.90 on the National Stock Exchange. The stock had opened at the first lower circuit of Rs 208.3, marking a 10 percent decline from the previous day’s closing price.
The circuit levels were subsequently lowered to 15 percent, 20 percent, 25 percent and 30 percent.
Zee Sony Merger
On Monday, Culver Max Entertainment, formerly known as Sony Pictures Networks India (SPNI), terminated merger agreements with Zee Entertainment, which could have otherwise created a USD 10 billion media enterprise in the country.
“SPNI, a wholly-owned subsidiary of Sony Group Corporation, today issued a notice terminating the definitive agreements entered into by SPNI and Zee Entertainment Enterprises Ltd (ZEEL) relating to the merger of ZEEL with and into SPNI, which was…announced on December 22, 2021,” a statement by Sony Group Corporation said on Monday.
Sony sent the termination notice to Subhash Chandra family-promoted media and entertainment firm following a stalemate over who will lead the merged entity, besides not satisfying other conditions for the merger.
Sony is also seeking USD 90 million as break-up fees for violating the terms of the merger pact and “invoking arbitration”, which ZEEL said it will contest legally.
On the other hand ZEEL said it has spent Rs 366.59 crore on compliances till September 2023 for its merger with Sony.
The company spent Rs 176.20 crore in the financial year that ended in March 2023. Besides, it spent Rs 190.39 crore in the first six months of the current fiscal, according to a regulatory filing by ZEEL.
On December 17 last year, ZEEL had sought an extension of the deadline from Culver Max and Bangla Entertainment Pvt Ltd (BEPL) under the 2021 agreement.
SPNI had initially said that it had not yet agreed to the deadline extension request by ZEEL. But later, it agreed to discuss the matter.
The proposed USD 10-billion merger had already received regulatory approvals from fair trade regulator CCI, NSE and BSE, shareholders and creditors of the company.
In August last year, the Mumbai bench of the National Company Law Tribunal (NCLT) also gave a go-ahead to the merger.
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