On Monday, Bloomberg News reported that Sony Group plans to call off the $10-billion merger of its India unit with Zee Entertainment Enterprises Ltd. The decision stems from a standoff over Zee’s CEO Punit Goenka’s leadership. People familiar with the matter revealed that Sony is actively working on sending a termination notice to Zee before January 20.
Deadline Extension Discussions for $10 Billion ZEEL Merger with Culver Max and Bangla Entertainment
Last month, ZEEL announced that Culver Max Entertainment (formerly Sony Pictures Networks India) is open to discussing an extension of the merger scheme’s effective date, a day before the deadline. ZEEL sought an extension from Culver Max and Bangla Entertainment Pvt Ltd to complete the proposed merger, aiming to create India’s largest media conglomerate, according to regulatory updates. CMEPL, an indirect wholly-owned subsidiary of Sony Group Corporation, and BEPL, another indirect wholly-owned subsidiary of SGC, are integral to the SGC Group. The regulatory approvals for the proposed $10-billion merger involving ZEEL, BEPL, and CMEPL have been secured from the fair trade regulator CCI, as well as the stock exchanges NSE and BSE, along with the company’s shareholders and creditors.
NCLT Approval for ZEEL-Culver Max Merger Faces Leadership Tussle
In August 2023, the Mumbai bench of the National Company Law Tribunal (NCLT) greenlit the merger between ZEEL and Culver Max Entertainment. According to the agreements, ZEEL MD & CEO Punit Goenka was designated to lead the merged entity. However, recent reports suggest that CMEPL is now insisting on appointing its Sony Pictures Network head, N P Singh, in this role, as reported by PTI last month.
This development followed an interim order by Sebi, which barred Essel Group chairman Subhash Chandra and Zee Entertainment Enterprises Ltd MD and CEO Punit Goenka from holding the position of director or key managerial personnel in any listed company. Sebi took this action following their alleged diversion of funds from the company.
Chandra and Goenka Successfully Challenge Sebi’s Order at SAT
Chandra and Goenka, responding to Sebi’s interim order, moved the Securities Appellate Tribunal (SAT) and successfully challenged it in October. In September 2021, Sony Pictures Networks India and ZEEL initiated a non-binding term sheet to integrate their linear networks, digital assets, production operations, and program libraries. The resulting combined entity, with over 70 TV channels, ZEE5 and Sony LIV streaming services, and Zee Studios and Sony Pictures Films India, became India’s largest entertainment network.
The definitive merger agreement was signed in December 2022, designating ZEEL’s CEO Punit Goenka to lead the combined company. The majority of the board, nominated by the Sony Group, included SPNI Managing Director and CEO N P Singh. Amidst uncertainties due to Sebi’s actions against Chandra and Goenka for fund diversion, the proposed merger, approved by ZEEL shareholders and regulatory bodies including the Competition Commission of India, faced questions about its future.