India: Zee-Sony merger approved, new entity to be publicly listed

India: Zee-Sony merger approved, new entity to be publicly listed

by Pranali Mehta

The board of directors of Indian media conglomerate, Zee Entertainment Enterprises, has reportedly announced that it has considered and approved the Scheme of Arrangement between the media company, Sony Pictures Networks India Private Limited and Bangla Entertainment & Pvt Ltd (BEPL).

As per the terms of the merger, Sony Pictures Networks India (SPNI) will own a 50.86 percent stake of the newly merged entity, while Essel, Zee’s holding firm, will own a 3.99 percent stake. The remaining 45.15 percent stake will be owned by public shareholders, according to the definitive agreement.

It has also been reported that Punit Goenka will continue as the CEO and Managing Director of the newly formed entity.

The finalization of the deal, however, will remain subject to certain closing conditions that include regulatory, shareholder, as well as third-party approvals.

SPNI will be left with a cash balance amounting to $1.5 billion when the deal closes, which will include an infusion by the current shareholder of the firm and the promoters of Zee, stated the companies.

Zee had previously announced in September that an in-principle approval had been unanimously provided by its board for the Sony Pictures Network India merger.

The transaction is expected to ease the pressure on Zee from its top shareholder, Invesco, which had called for a management reshuffle in September amidst ongoing governance concerns with its board of directors.

Invesco, which has a 17.88 percent stake in Zee, had been turned down by Zee’s board in its attempts of reshuffling, which also included the removal of Punit Goenka, son of Subhash Chandra, the founder of Zee TV and chairperson of Essel Group.

In an open letter, Invesco had raised two concerns over the proposal of the merger.

The first was the non-compete payment to Subhash Chandra, which according to investment management is a pretense for giving 2 percent equity stake to promoters of Zee, while the second was the inclusion of a provision that allowed Subhash Chandra’s family in raising their stake to 20 percent (from 3.99%) without any specific details on the process or the timeline.


Pranali Mehta

A chemical engineer by qualification, Pranali Mehta dutifully walked down the slated path and worked in a chemical firm for a year. Her passion for writing however, pushed her into experimenting with the same as a career. With over three years of experience in content writ Read more...