Zee Entertainment to merge with Sony Pictures Networks India
In accordance with its aim of generating
better growth and profitability as a major media and entertainment organization
across South Asia, Zee Entertainment Enterprises' board of directors authorized
the company's merger with Sony Pictures Networks India (SPNI).
In a stock exchange filing on September 22,
Zee stated, “The shareholders of SPNI would hold a majority shareholding in the
merged entity.” “As part of the acquisition, SPNI's owners will also inject
growth capital into the company, resulting in SPNI having about $1.575 billion
at closure to pursue future development opportunities.”
SPNI shareholders will own 52.93 percent of
the merged business after the proposed merger, while Zee shareholders will own
47.07 percent. Punit Goenka will remain the merged company's managing director
The Sony Group will be able to nominate a
majority of the board of directors for the merged firms.
The Zee board of directors approved the
execution of a non-binding term sheet with SPNI in connection with a potential
transaction involving a composite scheme of arrangement for the merger of the
company and Sony India, as well as infusion of growth capital into Sony India
by the promoters of Sony India as part of the merger, according to the filing.
Zee and SPNI will integrate their linear
networks, digital assets, production methods, and program libraries as
part of the merger.
The promoter family of Zee has the
opportunity to increase its ownership in the company from 4% to up to 20%,
according to the term sheet.
In a statement by R Gopalan, chairman of
Zee Entertainment, he said, "ZEEL continues to sail a solid development
trajectory, and the board firmly feels that this merger will further benefit
ZEEL. “The value of the merged firms, as well as the significant synergies
produced between the two, will not only drive corporate growth, but will also
allow shareholders to profit from future accomplishments.”
The news comes just a week after Zee
shareholders demanded that the promoters and present management, led by Goenka,
After the company's largest shareholders –
Invesco Developing Markets Fund and OFI Global China Fund – advocated for
Goenka's ouster, proxy advice firm Ingovern expressed concerns about the audit
From March 17, 2021, Goenka was
appointed on the audit committee, replacing Ashok Kurien and Manish
Chokhani, who resigned from the board of directors ahead of the company's
annual general meeting on September 14.
In govern stated in a note on September 14
that the board authorized the admission of a promoter executive director into
the audit committee, which was a bit strange.