Zee Entertainment Enterprises will be soon excluded from the MSCI Global Smallcap index, after it is merged with Sony Pictures, a report said on Saturday. At present, Zee Entertainment is part of the Nifty Midcap index.
On August 11, the Mumbai bench of the National Company Law Tribunal (NCLT) approved the merger scheme between Zee Entertainment Enterprises Limited (ZEEL) and Culver Max Entertainment (Sony).
Earlier on July 10, the division bench of judicial member HV Subba Rao and technical member Madhu Sinha had reserved its order on the merger scheme as various operational and financial creditors had objected to the Zee-Sony merger scheme in the NCLT.
The company has reached a settlement with IDBI Bank, IndusInd Bank, and the Indian Performing Rights Society (IPRS), and now ZEEL is in the final leg of the merger.
As the effective date of the merger is not yet revealed, MSCI will announce the last day of trading later, the Economic Times reported.
On Friday, shares of Zee Entertainment ended 2.4 per cent down on the National Stock Exchange at Rs 265.75.
As per Nuvama Alternative & Quantitative Research, Zee stock’s final trading day may be at the end of September or early October. The delisting may see potential outflows of $22 million.
Subsequently, the merged entity will be relisted in 4 to 7 weeks. Therefore, the possible listing of the new entity could be around November.
Nuvama said that if the merged entity has a significant market cap, the early inclusion of the company in the standard index post-listing could result in inflows to the tune of $230 million.
The post-merger price action could help the merged entity enter the Nifty Next 50, possibly in the March 2024 index review.
Nuvama further said assessing the impact in terms of days is currently less meaningful due to differing trading volumes of freshly listed equities.
Nuvama added that the futures and options contracts of Zee Entertainment will expire on its last trading day. And as per current rules, new derivatives will require at least six months of listing and most importantly, Sebi approval for inclusion. Therefore, one can say that the new entity will not trade in the derivatives segment.
Meanwhile, Punit Goenka, former managing director & chief executive officer of ZEEL, on Friday moved the Securities Appellate Tribunal (SAT), challenging a recent confirmatory order issued by the markets regulator Sebi.
In its appeal, Goenka’s counsel requested a stay on the effect and operation of the regulator’s order.
On 14 August, Sebi had in its confirmatory order restrained Punit Goenka and his father Subhash Chandra from holding any key managerial position in any listed company or Zee group entity until further orders.
These entities include Zee Entertainment Enterprises, Zee Media Corporation, Zee Studios and Zee Akaash News.
Earlier, Sebi in a 12 June order had barred Goenka and Chandra from holding key positions in the group an alleged funds diversion case.
Also read: NCLAT to hear IDBI Bank’s appeal against Zee Entertainment on Aug 31
Also read: SEBI bars Zee’s Goenka and Chandra from 4 group firms; says probe to be completed in 8 months