On January 22, Sony Group Corporation officially canceled its proposed merger between its Indian subsidiary, formerly Sony Pictures Networks India Private Ltd (now Culver Max Entertainment Ltd), and Zee Entertainment Enterprises Ltd (ZEEL). The termination notice cited delays in the merger process and conflicting views on the leadership of the combined entity, involving Zee’s MD & CEO Punit Goenka.
Sony Corporation issued a statement expressing disappointment over the failure to meet closing conditions within the stipulated timeframe, despite more than two years of negotiations. The $10 billion merger, initially announced on December 22, 2021, faced challenges, leading to Sony’s decision to terminate the definitive agreements between the two entities.
Additionally, Sony is reportedly seeking $90 million in termination fees from Zee. While discussions were held in good faith to extend the merger cooperation agreement’s end date, an agreement could not be reached by the January 21 deadline. Sony emphasized its commitment to expanding its presence in the Indian market, expressing dedication to delivering world-class entertainment to Indian audiences.
The leadership dynamics became a point of contention, with Sony expressing discomfort over the regulatory issues surrounding Zee’s MD & CEO Punit Goenka. Goenka had faced a ban by the Securities and Exchange Board of India (Sebi), which was later overturned by the Securities Appellate Tribunal (SAT) on October 30, 2023. Despite the reprieve, regulatory probes related to allegations of fund diversion persisted.
Sony, adhering to its corporate governance policies, advocated for its India MD & CEO NP Singh to assume the top role, a proposal contested by Goenka. The anticipated completion date of the merger was December 21 of the previous year. However, Zee sought a deadline extension on December 20, with a grace period expiring on January 20, as per the terms of the merger pact signed in December 2021.
The definitive agreements outlined provisions for discussions on extending the end date if the merger did not close within 24 months from their signature date. The parties were required to negotiate in good faith, with the discussion period extending for thirty days after the end date. If an extension agreement could not be reached during this period, any party had the right to terminate the definitive agreements by providing written notice.
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