Zee to take legal action after Sony confirms termination of $10-bn merger deal
PTC News Desk: ZEE Entertainment Enterprises Ltd (ZEEL) on Monday held a board meeting in order to discuss the merger termination notice sent by Japan's Sony Group Corp.
Why did Sony terminate the merger agreement?
Sony Group Corp confirmed on Monday that it has sent a termination letter to ZEE Entertainment Enterprises Ltd, citing its decision to cancel the $10 billion merger between its India unit and the media network.
In a letter sent to ZEE, Sony cited unmet conditions of the merger agreement as the reason for termination.
“Culver Max Entertainment (CME) today issued notice to Zee Entertainment Enterprises Ltd. (ZEEL) terminating the agreement dated December 22, 2021, to merge ZEEL and CME. Although we engaged in good faith discussions to extend the end date under the merger cooperation agreement, we were unable to agree upon an extension by the January 21 deadline. After more than two years of negotiations, we are extremely disappointed that closing conditions to the merger were not satisfied by the end date," it stated.
"We remain committed to growing our presence in this vibrant and fast-growing market and delivering world-class entertainment to Indian audiences," Sony added.
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Zee to take legal action
In an exchange filing, ZEEL responded to Sony's notice, which also sought $90 million for alleged breaches of the merger cooperation agreement terms.
"ZEEL categorically denies all the assertions raised by Culver Max and BEPL on the alleged breaches under the terms of the MCA, including their claims for the termination fee," ZEEL stated in its filing with the court today.
Culver Max Entertainment Pvt Ltd was previously known as Sony Pictures Networks India, and BEPL is an acronym for Bangla Entertainment Pvt Ltd.
"... ZEEL also held several deliberations and good faith negotiations with Culver Max and BEPL, with a view to considering an extension of the merger completion timeline, that did not materialise," it added.
ZEEL stated that its managing director and CEO Punit Goenka was willing to step down in the interest of the merger. Proposals in this regard were discussed, including the appointment of a director to the board of the merged company, safeguards for the conduct of pending investigations and legal proceedings in the best interests of ZEEL's directors and shareholders, and the resulting changes to the scheme to incorporate the same, it added.
"ZEEL's board of directors is evaluating all the available options. Basis the guidance received from the board, ZEEL will take steps to protect the long-term interests of all its stakeholders, including by taking appropriate legal action and contesting Culver Max and BEPL's claims in the arbitration proceedings."
In the filing, ZEEL chairman R Gopalan stated that they are evaluating the next steps and determining the best course of action.
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