Zee asks Sony to return to negotiations
January 25, 2024
By Chris Forrester
India’s Zee Entertainment has asked Sony to come back to the negotiating table. On January 24th, despite the collapse of the merger agreement last week and legal moves already being made, Zee admitted it had urged Sony to revive the plan.
The move, said by some locals to be an act of desperation and in particular with the prospects of a $90 million termination break-up fee claimed against Zee, includes an official comment saying: “The company has called upon [Sony] to immediately withdraw the termination and confirm that they will perform their obligations to give effect to and implement the merger scheme.”
“The company categorically refutes all claims and assertions made by [Sony] regarding alleged breaches of the [merger agreement] by ZEEL, including their claims for the termination fee, and reserves all its rights in this matter,” Zee said in its notice to the stock exchange.
“The company is evaluating all available options and basis the guidance received from the Board and will take all necessary steps to safeguard the long-term interests of its stakeholders, including by taking appropriate legal action and contesting [Sony’s] claims in the arbitration proceedings,” Zee added.
The stock exchange filing also referred to what was widely seen as a major sticking point in the merger which was the appointment of Zee’s Punit Goenka as the MD of the merged group.
“Punit Goenka, MD & CEO of ZEEL, was agreeable to step down in the interest of the merger and proposals in this regard were discussed, including for appointment of a director on the Board of the merged company, protections for conduct of pending investigations and legal proceedings in the best interest of ZEEL’s directors and shareholders and the consequent modifications to the scheme to incorporate the same,” Zee said.
Zee added on January 24th that it had notified India’s National Company Law Tribunal (NCLT), which handles corporate disputes, to seek a ruling order for the implementation of the merger.
Zee’s share price continues to be under pressure, falling 30 per cent on January 23rd and is now down some 36 per cent since the merger was first announced in September 2021. In early trading on the Bombay Stock Exchange January 24th its shares fell a further 4.42 per cent.