Zee Entertainment faced a 10 percent decline to Rs 249 per share on January 9, driven by reports suggesting that Japan’s Sony was contemplating abandoning the merger of its Indian unit with the company, over two years after announcing the $10 billion deal.
On January 9, approximately 1.35 crore shares, equivalent to 1.4 percent equity of Zee Entertainment, valued at Rs 340 crore, changed hands at an average price of Rs 252 per share, as per available data.
Over the past six months, the broadcasting company’s stock has seen a mere 6 percent gain, in stark contrast to the 10 percent rise in the Nifty Media index, as uncertainties continue to shroud the deal.
According to a report from Bloomberg, the Sony Group is contemplating scrapping the deal with Zee Entertainment due to an escalating conflict over the leadership of the merged entity. While the 2021 agreement stipulated that Punit Goenka would lead the new company, Sony is reportedly reluctant to have him as CEO amidst an ongoing regulatory probe.
The report indicates that Sony is considering filing a termination suit before the January 20 deadline, the extended closing date for the deal, citing unmet conditions. Despite the ongoing negotiations, a resolution might emerge before January 20, as per the report.
In December, both companies were granted a one-month grace period to finalize the merger, which would have resulted in a $10-billion media powerhouse. If the merger goes through, Sony would hold a 50.8 percent stake, with the Goenka family retaining a 4 percent holding. The merger has secured all necessary regulatory approvals in India.
Last year, the Securities and Exchange Board of India (SEBI) barred Punit Goenka from executive or director appointments in listed companies, alleging Zee’s involvement in faking loan recoveries to conceal financing deals by Subhash Chandra, Zee’s founder and Punit’s father. While Goenka received reprieve from the Securities Appellate Tribunal (SAT), Sony perceives the ongoing probe as a corporate governance issue, according to Bloomberg.
