Shares of Zee Entertainment fall 5% after reports of the collapse of the merger deal with Sony
Shares of Zee Entertainment Enterprises fell 5.1 percent on Friday following media reports that the company’s merger transaction with Sony India would fall through this weekend.
Shares of Zee closed at Rs 235.5 per share on Friday with a market valuation of Rs 22,620 crore. Zee’s market value has fallen by 30 per cent, or Rs 9,759 crore, since the deal was first announced on September 9, 2021.
On January 11 this year, Japan’s Sony Group had said it will continue talks till January 20 on the deal to merge its Indian subsidiary with Zee Entertainment Enterprises, creating a $10 billion entity. “Last-minute negotiations are taking place between all parties and we have to wait for a formal announcement to be made,” said a banker close to the deal.
As per the merger transaction announced in December 2021, Puneet Goenka, currently the Managing Director and Chief Executive Officer of Zee, would be the head of the merged entity. The merged entity would have a nearly 25 percent stake in India’s general entertainment channels (GEC). The Securities and Exchange Board of India (Sebi) had earlier asked Goenka to resign as Managing Director of Zee, citing regulatory lapses. But the Securities and Appellate Tribunal (SAT) had quashed the Sebi order on October 30 last year. After the Sebi order, Sony had reportedly changed its stand and asked Goenka not to head the merged entity.
Both Sony Group Corporation in Tokyo and Zee made no comment on Friday.
Earlier on December 19, Sony Pictures India had said that a notice from Zee to the Bombay Stock Exchange and the National Stock Exchange of India, dated December 17, is an acknowledgment that they have missed the December 21, 2023 deadline for closing the SPNI/ZEE will not be able to achieve. merger. “The notice activates an existing contractual provision in the deal that allows both parties to discuss the possibility of extending the deadline. SPNI is obliged to start those discussions, but has not yet agreed to an extension of the deadline. We look forward to hearing ZEE’s proposals and how they plan to meet the remaining critical closure conditions,” the company said.
In a late evening statement to the stock exchanges, Zee said it is negotiating with Sony to extend the deadline for completing the merger deal “by a reasonable period of time.
Zee said it is committed to the merger with Sony and continues to work towards a successful completion of the transaction and is conducting good faith negotiations with Sony.
First print: January 20, 2024 | 12:21 pm IST