The Board of Directors of Zee Entertainment Enterprises Ltd (ZEE) authorised a merger with Sony Pictures Networks India on Tuesday, with Punit Goenka remaining as the amalgamated entity’s MD and CEO.
The Board of Directors of Zee Entertainment Enterprises Ltd (ZEE) approved a merger with Sony Pictures Networks India on Tuesday, the firm stated in a company statement on Wednesday. The move allows Punit Goenka to keep his place as MD and CEO of the ZEE group, rebuffing Invesco’s attempt to remove him from the Board. According to the suit, “the Executive Board of Zee Entertainment Enterprises Ltd, attending and consenting in its board general meeting on September 21, 2021, overwhelmingly granted in-principal permission for the merging involving Sony Pictures Networks India (SPNI) and ZEE.”
Furthermore, ZEE’s Board of Directors accepted the execution of a purely symbolic term sheet with Sony Pictures on Wednesday morning, allowing Punit Goenka to hold his position for the next five years. As per the planned merger, Sony Pictures will have a 52.93 per cent ownership in the firm, while ZEE stockholders will have a 47.07 per cent stake. The statement with the market’s states that “based on the currently projected shareholdings of ZEE and SPNI, the suggested merging proportion would be 61.25 per cent in favour of ZEE.”
Zee, which boasts labels such as Zee TV and a presence in television programming, seemed to be under heat from prominent investors to restructure its administration, including the removal of CEO Punit Goenka from the management.
The merged corporation would continue to be a publicly traded company in India, with Goenka as MD & CEO, and NP Singh, MD & CEO of SPN, scheduled to attend the firm’s executive committee.
The majority of the board of directors of the merged firm will be appointed by Sony Group.
“Sony is unflinching in its planning to invest in India. SPE (Sony Pictures Entertainment) now owns the majority of the merged entity, and we anticipate NP to play a leading role on its board of directors,” said Ravi Ahuja, chairman of Global Media Studios and Sony Pictures Entertainment Corporate Communications, in an email chain to employees.
“ZEE and SPN are among of India’s most prominent entertainment firms, with massive audiences throughout genres, geographies, and unique integrated networks. The merger of ZEE and SPN will deliver together the media industry’s strongest leadership teams, content creators, and high-quality series and film libraries, resulting in a combined content platform that can compete with domestic and international portals and intensify that region’s digital conversion,” Ahuja said in the email- mail, a replicate of which ET obtained.
ZEE and SPN have inked an exclusive non-binding settlement agreement to merge their conventional networks, digital content, production management, and content libraries, with the ZEE board authorising management to initiate the appropriate due diligence procedure.
The combined company will operate 75 television stations, multiple online streaming platforms (ZEE5 and Sony LIV), two studios (Zee Studios and Sony Pictures Films India), and a virtual production studio (Studio NXT), making it one of India’s leading media organisations.
According to the most recent accounting reporting, they have about Rs 13,600 crore in revenue and over 4,000 employees.
Additionally, as part of the acquisition, the two companies’ promoters will sign various non-compete agreements.
As per the settlement agreement, the ZEE promoter family is free to grow its ownership from 3.99 per cent to up to 20 per cent under accordance with applicable law.
The ultimate agreement will be subject to the completion of normal due diligence and the execution of definitive agreements, as well as the applicable corporate, regulatory, and third-party approvals, including shareholder votes.
“The ZEE executive committee has concluded a critical evaluation of the SPN-ZEE proposed merger,” said R Gopalan, ZEE chairman. “As a board comprised of highly successful experts with extensive experience in a variety of industries, we constantly keep the best interests of all investors and ZEE in mind. We have unanimously approved the proposal in principle and have instructed the administration to begin the procedure.”
When Subhash Chandra was looking for potential buyers to reimburse creditors in 2019, Sony was one of three firms he was in discussions with. Nonetheless, the deal fell through owing to valuing disagreements, and Chandra subsequently sold nearly an 11 per cent interest to Invesco, which became ZEE’s largest investor with a 17.88 per cent stake.
ZEE’s present proprietor ownership is 3.99 per cent, and the company’s market capitalization has dropped to Rs 24,555.58 crore as of Tuesday.
ZEE stock closed at Rs 255.65 a share on the BSE on Tuesday, up 0.14 per cent. Invesco also sought the expulsion of two additional executives from the company’s board, Ashok Kurien and Manish Chokhani.
Both Kurien and Chokhani resigned on Monday, even though the fact that they were up for reappointment at the annual general meeting on September 14th.
ZEE’s present proprietor ownership is 3.99 per cent, and the company’s market capitalization has dropped to Rs 24,555.58 crore as of Tuesday.
ZEE stock closed at Rs 255.65 a share on the BSE on Tuesday, up 0.14 per cent. Surprisingly, when the transaction with ZEE fell through, SPN began discussions with Reliance Sectors of the economy Viacom18 in November 2019 over a similar merger. Nevertheless, the on-again, the off-again agreement also fell, with Reliance eventually removing the component in October of last year, after months of haggling.
Later this week, Invesco and OFI Global, two of ZEE’s major shareholders, asked for an Extraordinary General Meeting (EGM) to recommend the ouster of Punit Goenka and two others, as well as the addition of six independent members to the general meeting.
