Zee and Sony have announced a merger. The Board of Directors of Zee Entertainment Enterprises Ltd. (ZEEL) has in principle unanimously approved the merger between Zee Entertainment and Sony Pictures Networks India (SPNI). This follows several months of hectic deliberations during which there had been rumours of a likely merger. According to the deal, Sony Pictures Entertainment will infuse USD 1.575 billion in the merged entity. Zee’s managing director and CEO Punit Goenka will continue as MD and CEO of the merged entity for at least five years. It may be mentioned here that this deal will fend off the two institutional investors — Invesco Oppenheimer Developing Markets Fund and OFI Global China Fund LLC — which wanted Goenka out and had very recently asked the shareholders to remove three directors including Punit Goenka.
Post-merger, 47.07% stake will be held by shareholders of Zee Entertainment while Sony Pictures Networks will hold a 52.93% stake in the merged entity which will be
a publicly listed company.
According to the ZEEL Board, “The merger will be in the best interest of all the shareholders and stakeholders and it is in line with ZEEL’s strategy of achieving higher growth and profitability as a leading media and entertainment company across South Asia.” Post-merger, 47.07% stake will be held by shareholders of Zee Entertainment while Sony Pictures Networks will hold a 52.93% stake in the merged entity which will be a publicly listed company. Meanwhile, the existing promoter family of Zee will have the option to increase shareholding from the current 4% to up to 20% in the normal course of business, the deal mentioned.
ZEEL and SPNI have entered into an exclusive non-binding term sheet.
Both the companies have agreed to combine linear networks, digital assets, production operations and program libraries as part of the deal. Further, certain non-compete arrangements will be agreed upon between the promoters of ZEEL and the promoters of SPNI. ZEEL and SPNI have entered into an exclusive non-binding term sheet. Both the companies will conduct a due diligence process over the next three months. The deal provides for the majority of the Board of Directors of the merged entity to be nominated by the Sony Group. It is anticipated that a final transaction would be subject to completion of the customary due diligence and execution of definitive agreements and required corporate, regulatory and third-party approvals, including the votes of ZEEL’s shareholders.
“The Board of Directors at ZEEL have conducted a strategic review of the merger proposal between SPNI and ZEEL. As a Board that encompasses a blend of highly accomplished professionals having rich expertise across varied sectors, we always keep in mind the best interests of all the shareholders and the Company. We have unanimously provided an in-principle approval to the proposal and have advised the management to initiate the due diligence process. ZEEL continues to chart a strong growth trajectory, and the Board firmly believes that this merger will further benefit the Company. The value of the merged entity and the immense synergies drawn between both the conglomerates will not only boost business growth but will also enable shareholders to benefit from its future successes. As per legal and regulatory guidelines, at the required stage, the proposal will be presented to the esteemed shareholders of the Company for their approval,” R. Gopalan, Chairman, ZEEL said.