Sony, Zee both sue for compensation
January 23, 2024
By Chris Forrester
The Sony/Zee merger is dead but both parties say legal claims for compensation will be made.
Sony is seeking a $90 million (€82.6m) termination fee over the collapsed deal, while Zee, in response, refuted the claims made by Sony and stressed its commitment to protecting stakeholders’ long-term interests.
Zee is reported to be evaluating options and plans to contest Sony’s claims through legal action and arbitration proceedings to safeguard its position.
Sony has already started an arbitration process in Singapore, according to reports.
However, despite break-down fees being part of the pair’s core negotiation documents, it would seem that because “good faith” extensions to the proposed signature dates were in place the waters are muddied as to the validity of claims for compensation. The lawyers will, no doubt, argue their corners.
Manmeet Kaur, a partner at New Delhi legal firm, Karanjawala & Co, said: “Both parties claim to have taken certain steps in view of the agreement. Further, Zee claims to have shut down some business entities. The question with regard to monetary compensation by either party is subject to any amicable solution or litigation deciding claims and counter-claims by both parties.”
The consequences of the failed merger extend beyond any immediate legal battles. Sony enjoys a 7-8 per cent market shares but the position for Zee is much more precarious and is widely said to be cash-strapped. Zee has yet to pay the fees to Disney Star for TV rights for last year’s ICC cricket tournament.
A major investor in Zee (Invesco) was behind the merger scheme and very much wanted to see the Chandra/Goenka family replaced. Invesco was not alone and the risk now is that other non-family shareholders in Zee will want to see action. The Chandra/Gonka family hold just 3.99 per cent of the company.
ZEEL shares fell 10 per cent on January 22nd.