Sony terminates merger agreement with Zee Entertainment

The termination follows a stalemate between the companies over whether Zee’s Chief Executive Officer Punit Goenka would lead the merged entity amid an investigation into his conduct by India’s capital markets regulator.

New Delhi: Culver Max Entertainment, formerly known as Sony Pictures Networks India (SPNI), has terminated merger agreements with Zee Entertainment, which could have otherwise created a Rs 83,140 crore ($10 billion) media enterprise in the country.

"SPNI, a wholly owned subsidiary of Sony Group Corporation, today issued a notice terminating the definitive agreements entered into by SPNI and Zee Entertainment Enterprises Ltd (ZEEL) relating to the merger of ZEEL with and into SPNI, which was...announced on December 22, 2021," a statement by Sony Group Corporation said.

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

If the merger did not close by 24 months after their signature date, the parties would be required to discuss an extension of the end date required to make the merger effective by a reasonable period of time, it said.

Such discussions were required to be held for a period ending 30 days after the end date.

"The definitive agreements further provided that if the parties are unable to agree upon such an extension by the end of the discussion period, any party could terminate the definitive agreements by providing written notice," it said.

However, the merger did not close by the end date as, among other things, the closing conditions to the merger were not satisfied by then, it said.

Sony sent a termination notice to Subhash Chandra family-promoted media and entertainment firm ZEEL after the end of one month grace period.

On December 17 last year, ZEEL sought an extension of the deadline from Culver Max and Bangla Entertainment Pvt Ltd (BEPL) under the 2021 agreement.

On December 19, SPNI had stated that it had not yet agreed to the deadline extension request by ZEEL. However, a day after it agreed to discuss the matter.

The proposed Rs 83,140 crore ($10 billion) merger had already received regulatory approvals from fair trade regulator CCI, NSE and BSE, shareholders and creditors of the company.

In August last year, the Mumbai bench of the National Company Law Tribunal (NCLT) also gave a go-ahead to the merger.