Sony group is cancelling the plan to merge with Zee Entertainment? Amidst this speculation, Zee Entertainment faced a big loss in the share market. Sony’s tie-up with Zee Entertainment may fall apart.
Zee-Sony Merged Update
On Tuesday, January 9, Zee Entertainment suffered a major loss in the stock market. On that day, Zee Entertainment’s share price fell nearly 13 percent in the morning trading session. However, soon after, Zee Entertainment claimed in an exchange filing that various news reports claiming that Sony would cancel the merger plan with them were not correct. Clarification was sought from the Bombay Stock Exchange and the National Stock Exchange Corporation in this regard. In response, Zee Entertainment said the report was incorrect.
In an exchange filing today, Zee Entertainment said, “We would like to reiterate that our company is committed to the merger with Sony. Our company continues to work towards consummating the proposed merger agreement. We would also like to say that our company has always complied with the obligations of the Securities and Exchange Board of India.
Share Market Rates
Meanwhile, the news that Sony might cancel the deal sent shares of Zee into a tailspin in the stock market. Shares of Zee Entertainment were trading at Tk 277.45 at market close on Monday. Their share price fell by 10 percent to Tk 249.75 when the market opened that day. After a while, the share price of Zee Entertainment fell further to Tk 242.30. That is, about 13 percent fall in share price. The situation did not change significantly after the exchange filing disclosed that the merger plan was pending. At 3 pm, the share price of Zee Entertainment was Tk 258.35.
In fact, to survive the competition with powerful entertainment companies like Netflix, Amazon or Reliance, Zee Entertainment and Sony Group decided to join hands. In 2021, a preliminary agreement was signed between the two organisations in this regard. According to Bloomberg, if these two companies join hands, it will create a very powerful entertainment company worth 1000 billion US dollars. As per the terms of the agreement, Sony Pictures Networks India Pvt Ltd will hold 50.86 per cent stake in the newly formed entity.
The Goenka family, the founders of Zee Entertainment, will own 3.99 percent of the new company. The two companies have received almost all necessary approvals from the regulators regarding the deal.
The agreement was supposed to be signed in December. But, it was postponed by a month. January 20 contract deadline. But, Sony may send a notice to cancel the contract before that, according to Bloomberg. Because, the Sony Group alleged, Zee is not complying with certain conditions required by the merger agreement. However, the main controversy revolves around Punit Goenka, the CEO of Zee and son of the company’s founder, Subhash Chandra.
As a result of the merger of the two companies, Punit was initially supposed to lead the new company. But, he is currently being investigated by the market regulator, SEBI. Sony does not want him as the CEO of the new company amid this investigation. This has created a stalemate between the two organisations. And this is why it is heard that Sony does not want to go ahead with this agreement.
