Sony is close to calling off its proposed US$10 billion merger between its India operations with Zee Entertainment Enterprises over a disagreement on who will lead the entity. Although discussions are still ongoing, Sony plans to file a termination notice before the extended January 20 deadline to close the merger, Bloomberg reported, citing people familiar with the matter.
According to The Economic Times, the lapses in complying with what are called conditions precedents (CP) in legalese, has added to the simmering discontentment between the suitors, who thus far could not agree on ZEE’s Managing Director, Punit Goenka, being the CEO of the merged entity, until he is cleared of charges that he siphoned off money from the publicly-traded firm to closely held companies owned by his family’s Essel Group. The Goenka family owns 3.99% equity in Zee Entertainment Enterprises.
However, Zee Entertainment on Tuesday said it is “committed” to the merger with Sony Pictures Networks India and is working towards a “successful closure” of the transaction. The deadline of completion of the merger with Sony Pictures, now known as Culver Max Entertainment Private Ltd (CMEPL), had been extended for a month till January 21 after Zee Entertainment Enterprises sought an extension under the Merger Cooperation Agreement signed between them two years before.
Initially, the deal was intended to combine Zee Entertainment Enterprises and Sony’s linear TV networks, digital assets, production operations, and program libraries. The merged company would have retained Zee’s stock market listing in India, but Sony would have provided a large cash injection and controlled a majority share stake of close to 51%.
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