Sony Pictures Networks India Terminates Merger Agreement with Zee Entertainment Enterprises
- ByStartupStory | January 22, 2024
Sony Pictures Networks India (SPNI) has terminated its merger agreement with Zee Entertainment Enterprises after the expiration of the “Discussion Period” to re-evaluate the terms of the agreement on January 20.
In a statement released on its website, SPNI announced that it had issued a notice to ZEE, terminating the definitive agreement. The merger did not close by the End Date due to the closing conditions not being satisfied. SPNI engaged in discussions in good faith to extend the End Date, but the Discussion Period expired without an agreement on the extension.
The end date referred to by Sony was 24 months after the signing of the merger agreement, which was completed on December 21, 2021. Both SPNI and Zee had expected to merge within 24 months of this agreement.
In a statement to businessline, Sony mentioned that despite engaging in good faith discussions to extend the end date, they were unable to agree upon an extension by the January 21 deadline. Sony expressed disappointment that the closing conditions were not satisfied by the end date and reiterated its commitment to growing its presence in the Indian market.
On December 21, 2023, the end date to complete the merger agreement, Zee sought an extension to carry out discussions with Sony to finalize the merger terms. However, a key point of contention arose when Sony expressed reluctance to have Zee CEO Punit Goenka as the MD and CEO of the merged entity due to ongoing regulatory issues. This issue remained unresolved during the extension period.
Sony stated that it does not anticipate any material impact on its consolidated financial results due to the termination of the merger agreements. However, experts predict that Zee’s stock price could experience a significant decline following this announcement.
The termination of the merger agreement raises questions about the future of Zee, with speculation about the possibility of a hostile takeover. Additionally, institutional investors have reportedly approached SEBI against Goenka and are discussing requisitioning an extraordinary general meeting to oust him.
As of now, Sony is not obliged to pay any termination fee, as the $100 million fee elapsed after the December 21 deadline. However, there is a possibility of legal action from Goenka against Sony, which could lead to a complex legal battle in the National Company Law Tribunal or the Bombay High Court.
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