ZEE-Sony Merger Deal: Deets You Need To Know

On December 21, 2021, the 90-day due diligence period for the merger between Zee Entertainment Enterprises and Sony Pictures Networks India Private Limited expired. On September 22, the firms announced their merger.

The due diligence phase for the merger proposal finished today, so an update on its status is expected soon. Following the merger, Zee Entertainment Enterprises (ZEE) would own 47.07 per cent of the merged company, while Sony Pictures Networks India (SPNI) would own roughly 53 per cent.

Important Details about the Zee-Sony Merger Deal

Five Sony executives will serve on the merged entity's nine-member board of directors. According to reports, Sony Pictures Entertainment (SPE) has named Tony Vinciquerra as chairman and CEO; Ravi Ahuja as chairman, Global Television Studios and SPE corporate development; and Erik Moreno as executive vice-president, corporate development and M&A, SPE.

It's worth noting that SPNI will have the authority to appoint the majority of the amalgamated entity's board of directors. Meanwhile, as part of the acquisition, Puneet Goenka will continue to serve as the amalgamated entity's MD and CEO for the next five years. He will, however, be the sole ZEE executive on the board.

According to reports, the two companies were planning to complete a definitive merger deal before Christmas, under the agreed-upon 90-day exclusivity period. According to sources, the arrangement also aims to satisfy some of Invesco's concerns over the Zee promoter family's stake in the merged business.

Why is Invesco’s approval crucial?

The 90-day due diligence period has ended, and a binding bid must be submitted before the deadline. If Sony makes a binding offer, ZEE's board of directors must accept it before seeking consent from other stakeholders, including institutional investors like Invesco, which has objected to the promoter family's stake increase provision. Invesco is ZEE's major shareholder, it should be mentioned.

Invesco had sent an open letter in which it expressed its opposition to the promoter family's share growth. "Why should the founding family, which owns less than 4% of the company's shares, benefit at the expense of the remaining 96% of investors?" Invesco said in the letter.

Invesco has previously called for an EGM to reshuffle the ZEE board of directors and remove Puneet Goenka as CEO and MD. The National Company Law Tribunal (NCLT), the National Company Law Appellate Tribunal (NCLAT), and the Bombay High Court are now hearing the case.

Because Invesco and OFI Global China Fund together own over 17% of ZEE, their approval for the merger will be critical.

Analysts believe the merger will benefit both firms since it will improve synergies and allow the united entity to develop quickly. It is no secret that if the merger is approved, it would result in the development of India's largest entertainment network in the medium to long term.