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Zee Entertainment signs deal for merger with Sony Pictures India

IBEF:  September 23, 2021

The ZEE Entertainment Enterprises Limited (ZEEL) Board of Directors unanimously approved the merger between Sony Pictures Networks India (SPNI) and ZEEL in principle. SPNI will also inject growth capital into SPNI as part of the merger, giving it a total value of US$ 1.575 billion at closure, which it can utilise to pursue further development opportunities.

The ZEE Entertainment Enterprises Limited (ZEEL) Board of Directors unanimously approved the merger between Sony Pictures Networks India (SPNI) and ZEEL in principle. SPNI will also inject growth capital into SPNI as part of the merger, giving it a total value of US$ 1.575 billion at closure, which it can utilise to pursue further development opportunities.

Zee stated in a statement that its board of directors considered the combination not just on financial grounds, but also on the strategic value Sony brings to the table. The board concluded that the combination would benefit all shareholders and stakeholders. The merger is in accordance with ZEEL's plan to become a major media and entertainment firm in South Asia, with better growth and profitability. The board of directors has given permission to ZEEL's management to begin the requisite due diligence procedure.

Sony's stockholders will own a controlling interest in the merged entity. The shareholders of ZEEL and SPNI have agreed to integrate their linear networks, digital assets, production operations, and programme libraries in a non-binding term sheet.

The term sheet stipulates a 90-day exclusivity period during which ZEEL and SPNI will perform mutual diligence and reach a definitive agreement. In India, the combined entity will be a publicly traded business.

Mr. Punit Goenka will continue to be the combined entity's managing director and CEO as part of the deal. In addition, the promoters of ZEEL and SPNI will come to an agreement on various non-compete agreements. According to the term sheet, the promoter family is allowed to raise its shareholding from the existing 4% to up to 20%, as long as it complies with applicable legislation. The Sony Group will nominate a majority of the board members of the combined business.

The final transaction is expected to be subject to normal due diligence, the signature of definitive agreements, and applicable corporate, regulatory, and third-party approvals, including ZEEL shareholders' votes.

SPNI's success across entertainment genres (including gaming and sports), combined with ZEEL's strong expertise in content creation and deep consumer connect established over the last three decades, will add significant value to the merged entity and its management team, thereby increasing shareholder value multifold.

According to Mr. R Gopalan, chairman of ZEE Entertainment Enterprises Ltd, “The ZEEL Board of Directors has completed a strategic evaluation of the SPNI-ZEEL merger proposal. As a Board of Directors comprised of a diverse group of highly successful individuals with extensive experience in a variety of industries, we constantly keep the shareholders' best interests in mind.”

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.