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Mumbai: India’s largest listed television network Zee Entertainment Enterprises Ltd approved a merger agreement with a local entity of Sony Group Corp amid a complicated boardroom and courtroom dispute between Zee’s founders and its largest shareholder.
Sony Pictures Networks India Pvt. Zee will hold a 50.86% stake in the merged entity, while Zee’s founders will hold a 3.99% stake, according to an exchange filing on Wednesday. Public shareholders will have the remaining 45.15% as part of the surety agreement.
The transaction will help expand Sony’s media business in the world’s second most populous country, where Zee Media and Entertainment accounts for 17% of the market. This announcement comes three months after Zee and Sony non-binding agreement 22, which escalated a takeover battle between founder Subhash Chandra’s family and Atlanta-based Invesco Developing Markets Fund, which holds 18%, which is the largest share of equity.
Zee’s board also approved the appointment of Chandra’s son Puneet Goenka as the chief executive officer of the newly created entity, the filing said. As per the terms of the deal, the founders of Zee agreed to cap the equity in the combined company to 20% of their outstanding shares.
doubling
The latest development suggests that Sony and Chandra are doubling down on their efforts to close the deal. While Chandra is keen to retain his family’s influence over the indebted media firm founded in 1992, Zee’s acquisition will give Sony Reach to do more than 1.3 billion viewers globally, and a vast library of local Indian language material that goes back to the 1990s. Zee’s own streaming platform is also a leader among local players with approx. 73 million Monthly active users till the end of March.
Zee shares were trading 1.8% higher at 9:17 am in Mumbai, taking this year’s gain to nearly 58%.
Unhappy with the way Zee is being run, Invesco has been continuously demanding the removal of Goenka from the board and a shareholder meeting as CEO.
Zee’s founders have instead blamed the US fund for “some big design” to force a shareholder meeting. Invesco sought the removal of Goenka after Reliance Industries Ltd’s efforts in March to facilitate the purchase of Zee – run by Asia’s richest man Mukesh Ambani – failed.
The Bombay High Court is hearing Invesco’s appeal against an October order barring the US fund from convening a meeting of Zee’s shareholders. An adverse order for Zee could throw a spill in the works as Invesco did not support the deal with Sony, even though the non-binding agreement was announced in September, allowing Goenka to stay on as CEO and raise the founders. Permission granted. ‘ Shareholding in the combined entity.
The definitive agreement retains those terms. The merger transaction still requires regulatory, shareholder and third party approvals. bloomberg
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