Sony calls off merger with Zee Entertainment in India

In a board meeting today (22 January), Zee Entertainment Enterprises addressed termination notices received from Sony Pictures Networks India, earlier today. Sony Pictures Network issued a statement through which it called for the end of the proposed merger with Zee, which was agreed on 21 December 2021.

 

According to Zee's statement, Sony Pictures Network is demanding US $90 million (approx INR 748 crore) termination fee, citing alleged breaches by ZEEL and initiating arbitration for interim reliefs.

 

Zee's statement refutes Sony's claims and emphasised their compliance with the Merger Cooperation Agreement (MCA) approved by shareholders and regulatory authorities. Zee added that it had 'genuine efforts' but negotiations with Sony Pictures Networks fell through.

 

The statement added that Punit Goenka, ZEEL's CEO, expressed willingness to step down for the merger, suggesting discussions on board appointments, protections for investigations, and scheme modifications. 

 

ZEEL proposed a six-month extension for the transaction, but negotiations failed, leading to termination by Culver Max.

 

In response, ZEEL is actively exploring all options to safeguard stakeholder interests, including legal action and contesting the termination claims. 

 

Despite incurring costs, ZEEL remains committed to the merger and will evaluate organic and inorganic growth opportunities. Expressing gratitude to shareholders, legal authorities, and business partners, ZEEL aims to contribute to sector growth and the broader Indian economy.

 

R Gopalan, chairperson, Zee Entertainment Enterprises, said, “The board of directors has taken note of Sony’s letters purporting to terminate the Merger Co-operation Agreement, on the company’s proposed merger with and into Culver Max Entertainment (Sony Pictures Network), invoking arbitration and seeking interim reliefs. We are evaluating the next steps and considering the appropriate course of action."

 

He added: "The board has noted that the Company took all the required steps in the course of its integration journey over the last two years, to ensure that the scheme is implemented at the earliest. That said, the board would like to assure its stakeholders that the company will take all the necessary actions, in the best interest of all stakeholders, including taking appropriate legal action and contesting Culver Max and BEPL’s claims in the arbitration proceedings.

 

"The board has complete faith in the highly experienced senior management of the company and will continue to guide the team. We recognise and value the trust our shareholders and stakeholders place in us, and we express gratitude for their continued support.”