Sony agrees to discuss merger deadline extension with ZEE; stock surges 6%

The ZEE-Sony merger deal has witnessed another turn of events, after Sony Pictures Network India (SPNI), now known as Culver Max Entertainment Private Limited (CMEPL), agreed to hold discussions with ZEE Entertainment Enterprises Ltd (ZEEL) on merger deadline extension.

"The Company is now in receipt of a communication from CMEPL and BEPL that they will enter into good faith negotiations as required under the Merger Cooperation Agreement (MCA) entered amongst the Parties, the Company, CMEPL and BEPL, with a view to discuss the extension of the date required to make the Scheme effective by a reasonable period of time," says the company. The discussions are reportedly said to be the final attempt by both conglomerates to save a deal worth $10 billion.

Reacting to the development, shares of ZEE surged as much as 6.1% to hit an intraday high of ₹266.95 apiece on the BSE. The scrip opened higher at ₹258.45 on the BSE, as against the previous closing price of ₹251. At 1:03 pm, the share price of the company was trading 3.97% higher at ₹261.80. The company’s market capitalisation in the trading session stood at ₹25,146.40 crore with more than 8.22 lakh shares exchanging hands on the BSE, as against the two-week average of 12.92 lakh shares.

The development comes two days after Sony India on December 19 said that it has not yet agreed to a deadline extension. The company’s statement stems from a December 17 stock exchange filing by ZEE, where it sought more time for the proposed merger with Sony Pictures Network India.

The deal which was signed on December 21, 2021, to create the country’s largest media and entertainment conglomerate worth $10 billion, had an initial deadline of January 2023. However, the cut-off date for the execution of the ZEE-Sony merger was later extended to December 22, 2023. Though the deal has received a nod from NCLAT (National Company Law Appellate Tribunal) and the Competition Commission of India (CCI), it continues to be embroiled in several legal as well as regulatory discrepancies, thus causing delays to the proposed merger.

The Securities Appellate Tribunal (SAT) in October 2023 had set aside an order barring ZEE CEO Punit Goenka from holding key managerial positions in the company and other associated firms. It directed Goenka to cooperate with the SEBI investigation being carried out.

Goenka had earlier challenged the SEBI order, which barred its promoters Subash Chandra and him from taking managerial roles in any of the Zee group companies.

Last week, the company’s non-independent director Adesh Kumar Gupta exited ZEE ahead of the annual general meeting (AGM). In September 2023, IDBI Bank and Axis Finance, too, filed appeals before the NCLAT (National Company Law Appellate Tribunal), Delhi, challenging the NCLT approval for the merger.

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