Zee Entertainment Enterprises Ltd said on Wednesday that “‘good faith negotiations” will happen with Japan-based Sony Group’s India unit to discuss an extension of the merger deadline.
The deal to create a $10-billion media and entertainment powerhouse was first announced two years ago, but has been delayed due to regulatory and other uncertainties.
“The Company is now in receipt of a communication from Bangla Entertainment Private Limited (‘BEPL’), and Culver Max Entertainment Private Limited (formerly known as Sony Pictures Networks India Private Limited) (‘CMEPL’) that they will enter into good faith negotiations as required under the Merger Cooperation Agreement (MCA) entered amongst the Parties, the Company, CMEPL and BEPL, with a view to discuss the extension of the date required to make the Scheme effective by a reasonable period of time,” said Zee in a stock exchange filing.
CMEPL is an indirect wholly-owned subsidiary of Sony Group Corporation (SGC). BEPL is also an indirect wholly-owned subsidiary of SGC and a part of the SGC Group.
Sony Group Corp’s Indian unit said on Tuesday that it has not yet agreed to prolong a merger deadline with Zee Entertainment, days after the latter sought an extension.
“The notice (from Zee) triggers an existing contractual provision in the deal that allows for both parties to discuss the possibility of extending the deadline,” Sony Pictures Networks India (SPNI) said in a statement.
“SPNI is required to start those conversations but has not yet agreed to a deadline extension,” it said, adding that it would hear Zee’s proposals and how it plans to complete the remaining critical closing conditions.
In August this year, the Mumbai bench of the National Company Law Tribunal (NCLT) also gave a go-ahead to the merger of ZEEL and Culver Max Entertainment. As per the agreements, ZEEL MD & CEO Punit Goenka has to lead the merger entity. However, according to some reports, now CMEPL is insisting on making way for its Sony Pictures Network head N P Singh.
This followed an interim order by Sebi barring Essel Group chairman Subhash Chandra and Zee Entertainment Enterprises Ltd MD and CEO Punit Goenka from holding the position of a director or key managerial personnel in any listed company. The market regulator took the action after they were found diverting funds from the company.
Chandra and Goenka moved the Securities Appellate Tribunal (SAT) challenging the Sebi interim order. In October, SAT quashed the Sebi interim order.
Earlier in September 2021, then Sony Pictures Networks India (SPNI) and ZEEL had entered into a non-binding term sheet to bring together their linear networks, digital assets, production operations and programme libraries.
The combined entity will own over 70 TV channels, two video streaming services (ZEE5 and Sony LIV) and two film studios (Zee Studios and Sony Pictures Films India), making it the largest entertainment network in India.
Subsequently, the two parties signed a definitive agreement for their merger in December 2022.
As per the agreement, ZEEL’s chief executive Punit Goenka was to lead the combined company as its Managing Director & CEO.
The majority of the board of directors of the combined entity would be nominated by the Sony Group and include the current SPNI Managing Director and CEO N P Singh.
However, questions over the future of the merger arose after Sebi’s actions against Chandra and Goenka for siphoning off funds of ZEEL.
The proposed merger has already been approved by the shareholders of ZEEL and sectoral regulators including the Competition Commission of India.
With inputs from PTI
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