TheZee-Sony merger dealis seeing new twists and turns every day and there are never endingopinions and speculationsover the much-anticipated union of the two media giants which is getting delayed.
While Zee Entertainment Enterprises Ltd (ZEEL) notified BSE about its request to Sony Pictures Network India (now Culver Max Entertainment Pvt Ltd) to extend the timeline to close the merger deal, a day later, Sony replied that it has not agreed to a deadline extension. Now Zee has come out with another disclosure to the BSE that Sony has agreed for a discussion on the same.
Amid these daily developments and uncertainty on if and when themergerwill happen, analysts are positive that the extension oftimelinewill not hamper the merger.
“There is a high likelihood of the merger going through, as Zee is equally keen to do the merger, just as Sony. Punit Goenka may not risk the merger being called off, at the helm of him becoming the CEO. The merger not going through would work against his own shareholders and industry’s interest at large,” said Karan Taurani, Senior Vice President, Elara Capital.
Industry insiders are also of the view that calling off the merger will be a huge hit to the companies and a big win forReliance, considering that there is another merger in the works – Reliance and Disney India- which is likely to acquire a big market pie.
The two mergers are likely to change the entire television landscape in India as they will take 67% of the market share.
It was in December 2021 that ZEEL announced the merger with Culver Max Entertainment. As per the agreement, the merger was to be completed by December 21, 2023.
Sony had earlier objected to a provision in the proposed deal that designates Punit Goenka as the CEO of the merged entity, citing concerns related to the ongoing Securities and Exchange Board of India (SEBI) investigation into a corporate governance case.
Two days after requesting Sony to push the deadline for their merger, ZEEL has informed the BSE that Sony has agreed for a discussion on the matter.
Experts said that since the companies are now in talks, they will enter into good faith negotiations as required under the Merger Cooperation Agreement (MCA), with a view to discuss the extension of the date required to make the Scheme effective by a reasonable period of time.
According to another analyst, Zee’s willingness to negotiate with Sony in good faith is a very big respite for the merger, “as it ensures cooperation between both parties.”
Analysts believe that regulatory approvals - ROC, MIB and relisting process will take three to four months once the extension is granted and the merged entity is expected to be listed by April 2024.
“The Company is now in receipt of a communication from CMEPL and BEPL that they will enter into good faith negotiations as required under the Merger Cooperation Agreement (MCA) entered amongst the Parties, the Company, CMEPL and BEPL, with a view to discuss the extension of the date required to make the Scheme effective by a reasonable period of time,” ZEEL said in a filing on Wednesday.
On August 14, SEBI had imposed a ban on Goenka from holding key managerial roles in ZEEL and its affiliates. The ban, related to allegations of facilitating fund movements out of ZEEL and their complex return transactions, falsely portraying ZEEL's receipt of dues, was lifted by the Securities Appellate Tribunal (SAT) on October 30. This clearance allowed Goenka to resume his role in the planned merger with Sony Group's Indian unit.
