Zee Entertainment contacts Sony to revive terminated merger | Business News – Business Standard

Zee Entertainment Enterprises Ltd (ZEEL) is making a rapprochement with the Sony Group as it makes a last-ditch effort to revive a $10 billion merger, according to industry sources.

After the Japanese multinational pulled the plug on its $10 billion merger deal in January, the Indian company again contacted Sony to reconsider the termination and offered a meeting this month, a source said.

On the other hand, Sony is believed to be evaluating Zee’s proposal.

Comments from Sony Picture Networks India could not be obtained as an email query remained unanswered.

A Zee spokesperson said: “As the matter is before the courts, we have no comment to make.

Another source said ZEEL never stopped working on a possible reconciliation dialogue, citing the fact that it was ZEEL who moved to NCLT to effect the merger.

The ball is in Sony’s court. They must respond if the deal is to be revived, the source said.

The development comes as two parties file lawsuits against each other after the deal fell through. Sony had initiated arbitration proceedings at the Singapore Arbitration Center (SIAC) seeking $90 million (approximately Rs 748.5 cr) as termination compensation.

On the other hand, ZEEL filed a petition in the Mumbai court of the National Company Law Tribunal (NCLT), asking the Sony Group to implement the merger scheme. SIAC also denied Sony Group’s plea seeking interim relief against ZEEL to restrain NCLT from enforcing the failed merger of its subsidiary Culver Max with the Indian media house.

ZEEL has also taken appropriate legal action to contest the $90 million claims filed by Sony Group with SIAC.

More than two years after announcing their proposed merger, Sony announced the termination of the deal on January 22, while accusing ZEEL of failing to meet closing conditions even after extending the closing period by a month.

ZEEL has maintained that it is willing to meet most conditions.

Sources said that during the one-month extension of the negotiation period, ZEEL had proposed an extension of another six months for completing the transaction, and even offered to discuss another alternative closing timeline that Sony believed was reasonable and feasible would be.

ZEEL had also offered that its MD and CEO Punit Goenka would not run the merged entity as per the condition.

Earlier, market watchdog SEBI had barred Essel Group chairman Subhash Chandra and Goenka from holding the post of director in a listed company. The market regulator took action after it emerged that they had siphoned off money from the company.

However, this order was quashed by the Securities Appellate Tribunal (SAT). But the investigation against Goenka by SEBI (Securities and Exchange Board of India) is still ongoing.

Last week, Sony’s top management said in its December quarter results that it will explore several options, including finding a new option to replace the plan and opportunities for organic growth in India, which has great long-term potential.

“India has great long-term growth potential. It is a very attractive market. Therefore, we will try to look for different opportunities and if we can find another opportunity that could replace this kind of plan,” said Hiroki Totoki, president. COO & CFO of Sony when asked about the company’s strategy in India post the termination of the proposed merger.

While Goenka, in the company’s first earnings call last week after the deal to merge with Sony fell through, said ZEEL is focusing on a three-pronged approach: frugality, optimization and sharp focus on quality content.

The company is targeting a CAGR revenue growth of 8 to 10 percent, with the digital business growing much faster, he said.

ZEEL also said in its December quarter financial statement that it had spent nearly Rs 427 crore on the merger process.

A total of Rs 250.73 crore was spent on the merger in the nine months of FY24. It had spent Rs 176.20 crore in FY23 for the deal, announced in December 2021.

If the merger were completed, the combined entity would have owned more than 70 TV channels, two video streaming services – ZEE5 and Sony LIV – and two film studios – Zee Studios and Sony Pictures Films India – making it the largest entertainment network. in the country.

First print: February 20, 2024 | 6:50 PM IST