NCLT Approves Zee’s Exit from Zee-Sony Merger Implementation Application

Sony Pictures Networks India Pvt. Ltd. and Zee Entertainment Enterprises Limited (ZEEL), in December 2021, came into a merger agreement. Due to lapses by Zee, Sony terminated the definitive agreements of the merger in January. Despite making detailed requests before the tribunal to implement the scheme, Zee decided to withdraw the application, and the National Company Law Tribunal has now approved the withdrawal.

What transpired?

Sony, now Culver Max Entertainment Pvt. Ltd., and Bangla Entertainment Pvt. Ltd had inked the merger agreement with Zee on December 22, 2021. The agreements also said that if, by the end of the Discussion Period(i.e. Jan 2024), they couldn’t agree on an extension, any party could end the agreements by sending a written notice. Therefore, In January, Sony ended its $10 Billion merger deal with Zee. One of the major reasons the deal failed, was the lack of consensus over who would head the merged entity. Other reasons were the alleged financial mismanagement and recovering dues from related parties. Sony had then, initiated arbitration proceedings against Zee under Singapore International Arbitration Centre rules. Now, despite making detailed requests before the tribunal to enforce the merger scheme, the board of Directors at Zee approved the withdrawal of its application in April. In a media statement, ZEE said the decision will also enable the Company to pursue growth and to continue to aggressively pursue all its claims against Sony in the ongoing arbitration proceedings at the Singapore International Arbitration Centre (SIAC) and in other forums

What could have transpired?

If the deal was finalized, it would have contributed to the expansion of Sony’s media business in the world’s most populous country and a fast-growing market. Sony would have boasted over 75 television channels, securing a market share of 37%, surpassing Disney-owned Star’s 24% The Sony-Zee alliance would have entered into direct competition with the impending Reliance-Disney joint venture, creating a near-duopoly scenario. Not only that, the merger could have created a $10 billion media enterprise in the country.

Conclusion: The tribunal has now granted Zee permission to withdraw its application emphasizing that it had not commented on the merits of the case and has allowed both parties to pursue their legal remedies as necessary.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.