Zee-Sony Merger Gets Board Approval; Sony Will Hold 50.86% Of The Capital Of The New Entity

Sony accepted Punit Goenka’s appointment as Managing Director and CEO of the merged entity, which was an integral part of the deal

On December 22, the board of directors of Zee Entertainment Enterprises Ltd (ZEEL) approved the merger with Sony Pictures Networks India (SPNI). Sony will own 50.86% of the capital of the merged entity, the board said. The promoters of ZEEL will hold 3.99% and the other shareholders of ZEEL will hold 45.15% of the capital of the merged entity.

Giving the rationale for the merger, the Board stated: “The Company is engaged, among other things, in the development of television content, the broadcasting of regional and international satellite television channels of entertainment, cinema, music and activities. digital. The company is one of the largest entertainment networks in India.

Under the final agreements signed to merge ZEEL with and into SPNI, Sony will have a cash balance of $ 1.5 billion to enable the combined company to lead the creation of more precise content across all platforms, strengthen its presence in the rapidly evolving digital world. ecosystem, bidding for direct media in the growing sports landscape and pursuing other growth opportunities.

Announcing the merger, Zee said that SPNI had agreed to the appointment of Punit Goenka as CEO of the merged entity, which was an integral part of the transaction. A majority of the board of directors of the combined company will be appointed by the Sony Group and will include the current CEO and CEO of SPNI, N. Singh.

Singh will take a broader leadership role at SPE (Sony Pictures Entertainment) as chairman, Sony Pictures India (a division of SPE) reports to Ravi Ahuja, chairman of Global Television Studios and SPE Corporate Development of SPE.

The merger between the two entities was announced on September 22. Zee and Sony had said the companies would take 90 days to complete a trial due diligence. The period ended on December 21. Analysts say the merger is important as the merger of Zee and Sony will bring tremendous synergies between the two companies that will grow the business and industry exponentially.

Experts also pointed out that the merger will create India’s largest entertainment network with an audience share of 26%. Additionally, Zee-Sony handset will gain a 51% share from the first quarter of fiscal 22 data in the Hindi General Entertainment Channel (GEC) segment, which is the dominant genre on television in terms of viewers.

In Hindi films, which is another important genre, the Zee-Sony entity will have a 63 percent audience share. That’s why analysts said consolidation is a big plus and the resulting entity will have a 63 percent audience share. to replace the Star and Disney market leaders in the medium and long term.

As Zee and Sony have signed definitive merger agreements, Zee’s largest shareholder Invesco, which together with OFI Global owns nearly 18% of the media company’s capital, has raised concerns over the possibility of increase group participation. of the ZeeSony merger. As part of the definitive agreements signed on December 22, the promoters of ZEEL agreed to limit the stake they could hold in the combined company to 20 percent of its outstanding shares.

This construction does not confer on the promoters of ZEEL any right of pre-emption or any other right to acquire the capital of the combined company from the Sony group, the combined company or any other party, under the terms of the mentioned agreement. All shares purchased by promoters of ZEEL must comply with all applicable laws, including pricing guidelines, the agreement added.

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