ZEEL-Sony proposed merger, Sony to hold majority after infusion

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On September 21st, 2021, a meeting was held where the Board of Directors of ZEE entertainment enterprises limited voted for certain matters, with one mind, provided in principle approval for the amalgamation of Sony Pictures Networks India and ZEEL.

It has been already evaluated and calculated by the board of directors on how the partner is going to bring the strategic value and financial parameters to the company. The Board has concluded that the amalgamation will be in the best interest of all the stakeholders and shareholders.

ZEEL stated in a press statement, that, “The Joining of forces is going to help ZEEL in strategizing and achieving higher growth end profits as a leading media and entertainment company.” The Board has authorized the management of ZEEL has been authorized by the Board of Directors to activate the required due assiduity process.

The shareholders of Sony Pictures India will have a majority stake in the merged body. The shareholders of Sony Pictures India will also charge growth capital into Sony Pictures Network India as part of the merger such that it has approximately 1.576 billion Dollars at closing, for use in going after other growth opportunities. Based on the existing estimated equity values of SPNI and ZEEL, the indicative merger ratio would have been 61 percent which is in favor of ZEEL.

SPNI and ZEEL have entered into a non-binding contract to bring both companies’ digital assets, linear networks, program libraries, and production operations together. The agreement provides an exclusive period of 90 days. In these 90 days, ZEEL and SPNI will conduct mutual assiduity and finalize definitive agreement(s).

It is going to be a publicly listed company in India. As part of the agreement, Mr. Punit Goenka will continue to be CEO and the Managing Director of the merged entity.

Following the mutual agreement, the promoter family has decided to increase its shareholding from the 4 percent currently up to 20 percent, in such a way that it is following the law applicable. Sony Group will nominate a majority of the Board of Directors of the merged body.

It is expected that the final transaction would be subject to completion of customary due diligence and execution of definitive agreements and required corporate, regulatory, and third-party approvals, including the votes of ZEEL’s shareholders.

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