Sony backtracks form merger deal with Zee Entertainment ?

The market is agog with rumors that Japanese entertainment major and TV maker Sony Group Corporation is calling off its plan to merge its Indian arm Culver Max Entertainment, formerly known as Sony Pictures Networks India (SPNI) with Zee Entertainment Enterprises Ltd. A leading business wire service says Sony has officially conveyed its decision to the Indian firm The companies have been in discussion on this 10 billion dollar deal for over two years.

An evading solution on who will head the merged entity has finally led to walking out of the Japanese firm from the deal. According to market sources, Zee has been insisting that its head Punit Goenka should be the managing director and chief executive officer of the new company. Since he has been facing a money laundering allegation which is being probed by the market regulator Securities Exchange Board of India (SEBI), Goenka is a persona non grata to Sony.

According to media reports, Institutional investors in ZEEL, especially the Life Insurance Corporation of India (LIC) which holds a 23.5 percent stake in ZEEL, do not back ZEEL. They have urged SEBI to step in. They reportedly are working on an alternative merger plan, if Goenka declines to give up his claim.

SEBI last year alleged that Zee engaged in deceptive practices by falsely claiming the recovery of loans to hide private financing deals linked to Zee Chairman Subhash Chandran.

As per the deal, the merger was to be completed before December 21, 2023, including regulatory and other approvals with grace period of one month to complete the transaction.

If the merger did not close by 24 months after their signature date, the parties would be required to discuss an extension of the end date required to make the merger effective by a reasonable period of time, it said.

Such discussions were required to be held for a period ending 30 days after the end date.