The board of Zee Entertainment Enterprises Limited (ZEEL) authorized the merger with Sony Pictures Networks India (SPNI) on Wednesday, following a 90-day due diligence phase. According to Zee MD and CEO Punit Goenka, the planned merger is “in the final stages.”Sony, which will spend $1.5 billion, will own 50.86 percent of the combined company, while Zee owns the remaining 45.15 percent. The Sony Group will nominate the majority of the merged company’s board of directors, which would include NP Singh, the present Managing Director and CEO of Sony Pictures Networks India Private Limited. Goenka will act as the merged company’s Managing Director and Chief Executive Officer. The merged firm would own more than 70 television stations, two video streaming services (ZEE5 and Sony LIV), and two film studios (Zee Studios and Sony Pictures Films India), making it India’s most prominent entertainment network. In the Indian market, its closest competitors would just be Star and Disney.
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On Tuesday, Zee Entertainment Enterprises’ stock rose 5.26 percent to Rs 349 a share on the BSE. Meanwhile, Zee is at odds with its largest shareholder, Invesco, which voiced concerns over the promoter family’s stake augmentation in an open letter. In the letter dated October 11, Invesco had questioned: “why the founding family, which holds under 4% of the company’s shares, should benefit at the expense of the investors who hold the remaining 96%”. Invesco had also sought an emergency general meeting (EGM) to restructure the board and remove Goenka and had taken the case to court when Zee failed to convene one. The National Company Law Tribunal (NCLT), National Company Law Appellate Tribunal (NCLAT), and Bombay High Court are now hearing the Zee-Invesco case. In its October hearing, the HC granted Invesco a temporary injunction. Invesco Developing Markets Fund and OFI Global China Fund LLC own 17.9% of Zee.
