New Delhi:

Zee Entertainment Enterprises has sought a termination fee of USD 90 million (around Rs 748.7 crore) from the Sony Group for calling off the USD 10 billion merger deal in January this year.

It has sought termination fees from two Sony Group entities — Sony Pictures Networks India (SPNI), now known as Culver Max Entertainment, and Bangla Entertainment (BEPL), according to a regulatory filing from Zee Entertainment Enterprises Ltd (ZEEL) on Thursday.

ZEEL has, on account of Culver Max’s and BEPL’s breaches under the Merger Cooperation agreement (MCA), terminated the MCA by issuing a letter dated May 23, 2024.

The company has sought a termination fee from Culver Max and BEPL under the provisions of the MCA, it said.

“Culver Max and BEPL have failed to comply with their obligations under the MCA. Therefore, the company has terminated the MCA and called upon Culver Max and BEPL to pay the termination fee i.e. the aggregate amount equal to USD 90 million in accordance with the MCA,” it said.

Earlier on January 22, 2024, Sony Group Corporation (SGC) had said that ZEEL did not satisfy the merger conditions and initiated arbitration proceedings before the Singapore International Arbitration Centre (SIAC) claiming USD 90 million as termination fee.

This was contested by ZEEL before the SIAC, which denied any interim relief to the Sony group against the Indian broadcaster.

ZEEL had moved the National Company Law Tribunal seeking implementation of the proposed merger and later withdrew its plea.

“We hereby wish to inform you that the company has, on account of Culver Max’s and BEPL’s breaches under the MCA, terminated the MCA by issuing a letter dated May 23, 2024, and sought a termination fee from Culver Max and BEPL in accordance with the provisions of the MCA,” the filing said.

ZEEL and SPNI had entered into an agreement to merge on December 22, 2021.

On August 10, 2023 the Mumbai bench of NCLT approved the scheme of merger of ZEEL with Sony group entities Culver Max Entertainment and BEPL, which could have created a USD 10 billion media entity.

However, two years after that Sony Corporation announced the termination of the agreement on January 22, 2024.
 

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

Zee Entertainment logo
| Photo Credit: Reuters

ZEE Entertainment Enterprises Ltd on Tuesday said it has withdrawn its application, seeking implementation of the merger with Sony, filed before the National Company Law Tribunal Mumbai bench.

The company filed an application with the NCLT on January 24, 2024, seeking directions on the implementation of a composite scheme of arrangement between ZEE Entertainment Enterprises Ltd (ZEEL) and Sony group firms Culver Max Entertainment Pvt Ltd and Bangla Entertainment Pvt Ltd.

Earlier on January 22, Sony Group Corp called off a $10 billion merger of its India unit with ZEEL, following a stalemate over who will lead the merged entity. The deal was announced more than two years back. Sony had sought USD 90 million as break-up fees for violating the terms of the merger pact and invoked arbitration.

In a statement on Tuesday, ZEEL said the steps taken by it to withdraw the implementation application from NCLT are based on the legal advice received by the board.

“This decision will also enable the company to pursue growth and evaluate strategic opportunities to generate higher value for all shareholders. The Board remains committed to reviewing the strategic action-oriented steps taken by the management and providing timely guidance,” it added.

The company further said, “This decision to withdraw the implementation application will enable the company 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”.

Sony has already withdrawn its merger application from the NCLT after filing arbitration before SIAC.

On the reasons behind the decision, ZEEL Chairman R. Gopalan said the immediate priority for the company is to focus on performance and achieve its targeted goals for the future.

“We have reviewed the key steps taken by the management over the last few months that are result-oriented, and we believe that the company is well poised to chart a stronger growth trajectory,” he added.

Hence, after seeking an independent legal opinion, the board has advised the management of the company to withdraw the implementation application filed before the NCLT, Gopalan said.

“The board remains focused towards maximising shareholder value, strengthening the company’s claims in arbitration and enabling the company to explore strategic opportunities,” he noted.

Recently, ZEEL management initiated a process of rationalisation of the workforce by 15 per cent to prune staff strength across the company while its MD and CEO Punit Goenka took a 20% cut in his remuneration.

The board had also instituted a Monthly Management Mentorship (3M) Program to regularly review and advise the management on critical business aspects.

“The concerted efforts being taken by the board and the management are aimed towards achieving robust growth to consistently generate higher value for shareholders,” the statement said.

Zee Entertainment and SONY logos are displayed in this illustration taken, September 1, 2022.
| Photo Credit: Reuters

The National Company Law Tribunal (NCLT) on Tuesday accepted a petition by a Zee Entertainment shareholder seeking the merger of its Indian entity with Sony, which was called off last week despite regulatory approvals.

The Mumbai-bench of NCLT issued a notice on a petition moved by Mad Men Film Ventures, a shareholder of Zee Entertainment Enterprises (ZEEL), directing Sony Pictures Network India, now known as Culver Max, to file a reply within three weeks.

Mad Men Film Ventures on Tuesday filed the petition requesting both ZEEL and Sony to implement the merger as it was approved by the NCLT in August 2023.

The tribunal did not agree with the arguments made by the counsel stating that the approval by NCLT was conditional and depended on various conditions, which may be fulfilled or waived in writing.

NCLT has set March 12 for the next hearing on the matter.

Last week, the Sony Group Corp called off the merger with ZEEL following a stalemate over who will lead the merged entity. This merger could have otherwise created a $10 billion media enterprise in the country.

The deal stipulated that the merger was to be completed before December 21, 2023, including regulatory and other approvals with a grace period of one month to complete the transaction.

File picture of Punit Goenka

The Securities Appellate Tribunal on Monday lifted the ban on Zee Entertainment top boss Punit Goenka to hold board positions in any of the four Zee Group companies, paving the way for him to resume the proposed role in the planned merger between ZEE and the Indian unit of Japan’s Sony Group.

Shares of Zee Entertainment rose as much as 3.7% post the order.

India markets regulator, Securities Exchange Board of India (SEBI), in August, had barred Goenka and Zee Group Chairman Subhash Chandra from holding positions in Zee company boards alleging they were actively involved in diverting company funds to the group’s other listed entities and firms related to founding shareholders.

The SAT’s verdict on Chandra was not announced by 12 pm.

Zee Group had announced a merger of ZEE with Sony’s Indian business in 2021, but the move was delayed due to an interim SEBI order which had restrained Goenka from directorships of any listed companies.

In August, the company tribunal had approved the merger creating a $10 billion company.

While acknowledging the SAT order, Zee said in a statement that Goenka will cooperate with any further investigations by the regulator.