ZEE-Sony failed merger: NCLT allows ZEE to withdraw merger implementation application
ZEEL had initially filed the implementation application following the termination of the merger agreement by Culver Max and Bangla Entertainment on January 22, citing an alleged breach of the merger cooperation agreement (MCA).
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The National Company Law Tribunal (NCLT) has allowed ZEE Entertainment Enterprises Limited (ZEEL) to withdraw its application that sought direction to Sony Group Corp-owned Culver Max Entertainment and Bangla Entertainment to execute their composite scheme of arrangement, ET reports.
On January 22, 2024, Sony called off a $10 billion merger of its India unit with ZEEL, following two years of intense negotiations and a stalemate over who will lead the merged entity.
ZEEL had initially filed the implementation application following the termination of the merger agreement by Culver Max and Bangla Entertainment on January 22, citing an alleged breach of the merger cooperation agreement (MCA). Later, Culver Max and Bangla Entertainment lodged applications with the NCLT contesting the validity of ZEEL’s application.
On April 16, ZEEL had said that it has decided to withdraw the merger implementation application filed before the NCLT, Mumbai bench against Sony.
The decision was taken by the Board after seeking appropriate legal advice, Zee said in a statement. "This decision will also enable the Company to pursue growth and evaluate strategic opportunities to generate higher value for all shareholders. The Board remains committed towards reviewing the strategic action-oriented steps taken by the management and providing timely guidance."
The implementation application was filed by ZEE on January 24 seeking directions on the implementation of the Composite Scheme of Arrangement between ZEE, Culver Max Entertainment Pvt. Ltd. and Bangla Entertainment Pvt. Ltd.
This decision to withdraw the implementation application will enable the company to continue to aggressively pursue all its claims against Sony in the ongoing arbitration proceedings at the Singapore International Arbitration Centre (SIAC) and in other forums, Zee added.
R. Gopalan, Chairman, ZEE had said at the time, “The immediate priority for the Company is to focus on performance and achieve its targeted goals for the future. We have reviewed the key steps taken by the management over the last few months that are result-oriented, and we believe that the Company is well poised to chart a stronger growth trajectory. Hence, after seeking an independent legal opinion, the Board has advised the management of the Company to withdraw the implementation application filed before the NCLT."
During the May 17 earnings call, ZEEL MD and CEO Punit Goenka said, "As you would have read in our communication issued in April 2024, the Company has withdrawn its merger implementation application from the National Company Law Tribunal (NCLT). This decision will enable the Company to sharply focus on growth and strategic opportunities, in order to generate higher value for all shareholders."
He added, "That said, the Company will continue to aggressively pursue the arbitration proceedings at the Singapore International Arbitration Centre (SIAC) and in other forums."
On May 23, Zee stated in a regulatory filing that it has terminated the merger cooperation agreement (MCA) and has sought a termination fee of $90 million from Sony-group owned Culver Max Entertainment Pvt. Ltd. and its entity Bangla Entertainment Pvt. Ltd. (BEPL) for failing to comply with obligations under the MCA.
"Culver Max and BEPL have failed to comply with their obligations under the Merger Cooperation Agreement (MCA). Therefore, the Company has terminated the MCA and called upon Culver Max and BEPL to pay the termination fee i.e. the aggregate amount equal to USD 90,000,000, in accordance with the MCA," said Zee in an exchange filing.
