Zee asks Sony to extend merger deadline

Zee asks Sony to extend merger deadline

Mumbai: Zee Entertainment Enterprises has formally written to Culver Max Entertainment, an indirect subsidiary of Sony Group Corp, about extending the good faith negotiations to complete the merger deal but had not received any response from Sony’s India subsidiary till late Friday night.

The 30-day good-faith negotiation deadline to salvage the merger ends on January 20th.

“It looks like the deal is over as key stakeholders aren’t talking. Legal executives and bankers have taken over the discussions. The fact that Sony has not responded to Zee’s extension request so far is a sign that they have given up on the deal with less than 24 hours left for the deadline to end,” said a person close to the deal.

The two-year agreement to complete the multi-billion-dollar merger between Zee and Sony expired on December 21, 2023.

On December 20, Zee informed the stock exchanges that Sony had agreed to enter into good faith negotiations under the merger cooperation agreement (MCA) to extend the deadline required to make the merger scheme effective.

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Sony declined to comment while Zee told the stock markets that the “company is committed to the merger with Sony, is continuing to work towards a successful closure of the proposed merger, and is engaging in good faith negotiations with Sony to discuss the extension of the date required to make the scheme effective by a reasonable time.”

Legal experts say that both sides have to inform key regulators to legally terminate the merger deal. Being a listed company, Zee will also have to go to the board to get authorisation for not implementing the merger scheme. The companies will have to inform the National Company Law Tribunal (NCLT), the Competition Commission of India (CCI), and stock exchanges that they don’t intend to implement the merger scheme.

Sony has been steadfastly opposed to Punit Goenka’s appointment as the MD and CEO of the merged entity since the Securities Exchange Board of India’s (Sebi) probe continues to hang over his head.

Despite getting clearance from the Securities Appellate Tribunal (SAT) in October, Goenka continues to be under a Sebi probe for alleged diversion of funds from Zee to promoter entities. Sebi is currently conducting a probe against Goenka and his father, Subhash Chandra, chairman Emeritus of Zee.

Sebi had passed an order banning Goenkas from holding any top executive position or directorship in any listed entities. SAT has reversed that ban, following which Goenka was reinstated as the MD and CEO of Zee.

“As negotiations proceeded, Sony attempted to impose their terms on Goenka, assuming that he lacked viable alternatives and would yield. However, Goenka has held on to his stand that the merger deal should be implemented in its original form with him as the MD and CEO,” said another person aware of the deal.

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