Regarding the India merger, Sony sends a letter of termination to Zee: Report

  • Jan. 22, 2024, 5 p.m.

After a two-year acquisition saga, Sony Group Corp. has officially informed Zed Entertainment Enterprises Ltd. that it intends to call off the merger between its India unit and the media network, leaving Zed susceptible to competition as rivals assemble.
Those acquainted with the plan, who wished to remain anonymous since the information is not yet public, claimed that the Japanese entertainment conglomerate sent a termination letter to Zed early on Monday and is anticipated to reveal it to the exchange later.

According to the letter seen by Bloomberg, Sony terminated the agreement because certain conditions had not been met. 

A representative for Sony declined to comment. An inquiry for comment was not immediately answered by a Zed spokesman. 

The action comes after a standoff between the businesses over Punit Goenka, the CEO of Zed, and his leadership of the combined company during an inquiry into his behavior by India's capital markets regulator. The agreement, which would have established a $10 billion media behemoth with the financial clout to challenge global heavyweights Netflix Inc. and Inc., now looks to have been derailed by the impasse.

On January 8, Bloomberg News revealed that Sony intended to terminate the merger as long as the two parties couldn't agree on a leadership solution. Zed later stated that negotiations to finalize the merger were still ongoing.

One of the persons said Sony would take another look at a merger deal if Goenka is fired from Zed, which has been experiencing declining financial health. In comparison to the prior period, Zee's profit for the year ending March 31 fell 95% to 478 million rupees ($5.8 million). 

Grace Period

After a 30-day grace period ended over the weekend due to the inability of the parties to agree on a deadline established in late December, Sony sent out the termination letter.

The main obstacle to the merger was the last-minute leadership struggle. Zed was adamant that Goenka would head the new company as per the 2021 agreement, but Sony was hesitant to select him in light of the regulatory investigation into him.

The Mumbai-based media outlet was accused by the Securities and Exchange Board of India in June of fabricating the loan recovery in order to mask private financing transactions involving its founder, Subhash Chandra. SEBI ruled in an interim ruling that Chandra and his son Goenka "abused their position" and siphoned off funds. As a result, SEBI barred Goenka from positions as an executive or director in listed businesses.

As Bloomberg previously reported, Sony saw the ongoing investigation as a matter of corporate governance, even if Goenka received a reprieve from an appeal tribunal regarding the Sebi ruling. 

The nearly entirely approved merger that fell through would have formed a massive entertainment company in which Goenka's family would have owned 3.99% and Sony would have owned 50.86%.

Zee's extensive library of material in regional Indian languages and its array of several local television stations were supposed to be advantages for Sony, which would now have to rework its media ambitions for the most populated country in the world. 

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Zed is not only confronted with financial instability and investor anxiety, but it will also have to contend with more formidable competitors as discussions to combine Reliance Industries Ltd. and Walt Disney Co.'s Indian media businesses continue. 


Author : Rajdhani Delhi Representative

Rajdhani delhi representative

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