Zee-Sony $10 billion merger likely to be terminated? Reports
ZEEL’s institutional investors are reportedly seeking regulatory intervention. Now a report has surfaced suggesting that a communication ending the deal will be submitted to the Tokyo exchanges within the next 48 hours.
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Sony Group is reportedly not planning to extend the 'good faith' negotiations with Zee Entertainment Enterprises Ltd. (ZEEL), casting uncertainty on the $10 billion merger. Despite Zee's request for an extension beyond the January 21 deadline, Sony has not provided confirmation. Sources suggest a formal communication ending the deal will be submitted to the Tokyo exchanges within the next 48 hours, as reported by ET.
Some insiders however said otherwise. “There have been no developments during the weekend and both parties have been negotiating,” they said.
While there might have not been any developments in terms of communication between Zee and Sony, a clutch of institutional investors, including Life Insurance Corp. of India (LIC), owning more than 23.5 percent of Zee Entertainment Enterprises Ltd (ZEEL), wrote to the markets regulator that the current stalemate in the company’s merger talks with Sony group is hurting minority shareholders, people aware of the matter said.
The investors, which also include ICICI Prudential, Amansa Holdings, Nippon India, and Plutus Group, are also readying an alternative merger plan for the consideration of the Sony board if ZEEL managing director and chief executive Punit Goenka declines to step down before the deadline to complete the merger with Sony ends, the people said, requesting anonymity.
There have been talks around Goenka volunteering to step down to see the merger go through and then help in the process of searching an independent director, however neither Zee nor Sony confirmed the same.
Nonetheless, as per the latest clarification given by Zee representatives, speculations regarding the fallout of the merger are baseless even if all the controversies surrounding Zee suggest otherwise.
At the end, upon fulfilment of the legal requirements, it is Zee and Sony’s mutual decision to pull the trigger on the execution of the merger.
There is no simple answer to whether the merger will actually see the light of the day.
There are multiple factors to consider when determining the fate of the proposed merger between Zee and Sony.
“Sony India Private Limited’s parent company Sony Group Corporation is a well reputed Japanese organisation with a net worth more than 70 times that of ZEE, with more than seven decades in the business. The Japanese are known for their attention to detail in anything and everything they do, so it is highly unlikely that Sony will compromise on anything inferior which may tarnish their well-established reputation and goodwill,” corporate law expert and partner at Singhania & Co, Rajiv Sharma has told Storyboard18 when asked about the future of the deal.
