Wednesday, May 29, 2024

ZEEL spent Rs 366.6 crore on compliances for its merger with Sony


New Delhi: Zee Entertainment Enterprises Ltd (ZEEL) spent Rs 366.59 crore on compliances till September 2023 for its now-failed merger with Sony, which called off the deal on Monday.

The company had spent Rs 176.20 crore in the financial year that ended in March 2023. Besides, it spent Rs 190.39 crore in the first six months of the current fiscal, according to a regulatory filing by the Subhash Chandra family-promoted media entity.

After signing an agreement, ZEEL was racing to receive a series of regulatory clearances from SEBI, CCI, ROC, etc.

It also got a go-ahead from the National Company Law Tribunal after receiving approvals from shareholders and creditors and closed all formalities for the merger.

However, Sony Group Corp on Monday called off the USD 10 billion merger of its India unit with Zee Entertainment, following a stalemate over who will lead the merged entity, besides not satisfying other conditions for the merger.

It sent a termination notice to Zee on the deal, which was announced more than two years back, and is seeking USD 90 million as break-up fees for violating the terms of the merger pact and “invoking arbitration”, which ZEEL said it will contest legally.

According to experts, this would bring the stock of ZEEL under pressure in near terms.

The industry dynamics are also going to change as global media giant Walt Disney Co has signed a non-binding agreement last month with billionaire Mukesh Ambani-led Reliance Industries for a mega merger of their broadcasting businesses.

Had it been completed, the Zee-Sony merger would have been the biggest deal in the media and entertainment sector in India, creating one of the largest entities having over 100 channels and two leading OTT platforms.

The merged entity would have competed Disney Star with leading media houses as Star which called off merger and other rival OTT platforms such as Netflix and Amazon Prime.

“Sony which has around 7-8 per cent market share and ZEEL with around 16 per cent market share, the ideal situation would be a merger because the industry dynamics for the rest of the players are changing dramatically,” said Nuvama Institutional Equities Executive Director Abneesh Roy.

With the deal collapsing, both Sony and ZEEL will get marginalised, while Disney-Star and Network18 would have a strong market share of almost over 35 per cent, he added.


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