Sony has officially abandoned its extensive plans for merging its television and streaming operations in India with the local giant Zee Entertainment Enterprises, citing unmet closing conditions.
The proposed $10 billion merger, which had been in the works for over two years, encountered regulatory hurdles, with the National Company Law Tribunal finally approving in August.
Despite last week’s affirmation from Zee about its commitment to completing the deal with Culver Max Entertainment (formerly Sony Pictures Networks India), the merger has now been terminated.
The intended collaboration aimed to establish an Indian media powerhouse by integrating the linear TV networks, digital assets, production operations, and program libraries of both companies.
Sony, planning a substantial cash injection, would have assumed control with a majority stake of nearly 51%.
What we know
Reports earlier this month indicated Sony’s inclination to terminate the merger due to an impasse over leadership decisions within the combined entity.
The inability to reach a consensus on leadership became a pivotal factor, especially considering the cutthroat competition in the market and the imminent merger between Disney’s Indian businesses and the media assets of Mukesh Ambani’s Reliance Industries.
Sony emphasized that the merger’s termination is not expected to have a significant impact on its consolidated financial results, as the deal was not factored into its forecasts for the fiscal year.
In response, Zee conveyed its potential intention to pursue legal action against Sony.
What you should know
- The originally scheduled closing date for the deal was January 20, a deadline that went unmet due to the failure to satisfy the closing conditions. Punit Goenka, Zee’s CEO, initially designated to lead the combined company, faced scrutiny from India’s market regulator, prompting Sony’s discontent.
- Zee, in a statement, disclosed that Sony is seeking a $90 million termination fee, alleging breaches of the merger’s terms. Zee vehemently denies these allegations, asserting that it diligently adhered to the Merger Cooperation Agreement approved by shareholders and regulatory authorities.
- As the fallout unfolds, Zee is carefully evaluating its available options and vows to take all necessary steps to protect the long-term interests of stakeholders, including potential legal action. The company also noted that Goenka, in the interest of the merger, expressed a willingness to step down, and discussions on this matter took place.
