Zee shares were up more than 8 per cent on Tuesday and closed at Rs 193, up Rs 14.35….reports Asian Lite News
Zee Entertainment has denied reports that the company is in talks to revive the merger with Sony.
Zee Entertainment said, “We would like to clarify that the company is not involved in any negotiations, or any other event as stated in an article, and we categorically confirm that the news item is factually incorrect.
“We wish to clarify that the company is not aware of any information that has not been announced to the exchanges, which could explain the aforesaid movement in the trading, and we are not in a position to determine the material impact of the article on the company.”
Zee shares were up more than 8 per cent on Tuesday and closed at Rs 193, up Rs 14.35. The bounce in the stock was attributed to reports that Zee and Sony were in talks again to revive the merger.
Zee Entertainment Enterprises has written to SEBI that “continuous and repetitive” investigations can potentially impact the merger process…reports Asian Lite News
Sony’s board of directors is said to be unhappy with developments and is looking at invoking force majeure and material adverse clause in the shareholder agreement in the proposed merger with Zee Entertainment in India.
The lawyers on both sides, Shardul Shroff representing Sony Pictures Entertainment India and Economic Law Practice for Zee will be busy in the next few days as the unravelling of one of the expected biggest entertainment media mergers takes place.
Whether this will lead to Damages for Reps and Warranties Breaches remains a matter of conjecture?
In its reply to the Securities Appellate Tribunal (SAT), the Securities and Exchange Board of India (Sebi) said urgent action was warranted against the promoters of Zee Entertainment Enterprises Limited (ZEEL) in the alleged fund diversion case to safeguard the management and protect investors and other stakeholders.
It termed the applications made by Essel Group Chairman Subhash Chandra and ZEEL Managing Director (MD) and Chief Executive Officer (CEO) Punit Goenka as “completely false and misleading” in its response submitted to SAT on June 17.
“We have a situation before us where the chairman emeritus and the MD and CEO of this large listed company are involved in a myriad of different schemes and transactions through which vast amounts of public money belonging to listed companies are diverted to private entities owned and controlled by these persons. The appellant’s conduct is telling in this regard. Not only have there been violations but also the issuance of multiple false disclosures and submission of statements to cover up such wrongdoings,” Sebi said in a 197-page affidavit to SAT.
Zee Entertainment Enterprises has written to SEBI that “continuous and repetitive” investigations on the same cause of action creates prejudice for the Company and Shareholders and can potentially impact the merger process.
SEBI has given a No Objection Certificate (NOC) to the Composite Scheme of Merger in the matter of ZEEL and Sony Pictures Networks India Pvt. Ltd. (Sony), which is one of the largest integrations of industry majors in the media industry and entails an incoming foreign direct investment of $1.7 billion (approx.) into India.
In a letter to SEBI, Zee said, “please note that the said merger is at an advanced stage post receipt approvals from various regulators (including SEBI, Stock Exchanges and CCI etc.) and the scheme is also approved by 99.9 percent of the equity shareholders of ZEEL”.
Zee said it may also be noted that the transactions in the present matter pertain to the year 2019 and a detailed explanation has already been provided to Stock Exchanges and SEBI.
“It is beyond our comprehension as to why the present matter is being re-investigating/re-examining, when the cause of action pertaining to the matter is around 4 years old,” the company said.
SPNI has been present in India since 1995. But the network has not had a smooth run to either monetise its operations or expand it further from the present 26 TV channels, a film production and distribution unit and the widely-viewed streaming platform, SonyLIV…reports Asian Lite News.
Financially troubled Zee Entertainment Enterprises’ merger plan with Sony Pictures Networks India (SPNI) will hinge on what decision the shareholders take on the proposed move, but the current ZEEL management is confident that the proposal would sail through on account of the value it brings to the existing operations.
Speaking to IANS, R. Gopalan, Chairman, ZEEL, s`hown by the share price movement seen on the bourses.
“The value of the merged entity and the immense synergies drawn between both the organisations will not only help businesses grow, but will also enable the shareholders to benefit from its future successes. As per legal and regulatory guidelines, the proposal will be presented to the shareholders of ZEEL for their approval at the requisite time,” Gopalan said.
Asked whether ZEEL’s two of the largest shareholders – Invesco Developing Markets Fund and OFI Global China Fund, which have indicated no confidence on the current management of the company and have called for an EGM to oust the existing board members — could derail the current merger process, Gopalan said that “unlikely to happen”.
“The shareholders would see what value the current management is bringing. If things are only getting better for the company, I don’t see why the merger process gets rejected,” he said, clarifying that the call for an EGM by Invesco and OFI Global China and the merger plan are two separate issues, where the shareholders would take a call.
“Even Sony has reposed faith in the current management of ZEEL and has accordingly agreed to the five-year tenure of Punit Goenka as the MD in the merged entity. But Invesco and others want to remove the same team. It would be seen by all,” said Gopalan.
ZEEL shares jumped 10 per cent to Rs 281.20 after the company said its board has approved the merger between the firm and Sony Pictures Networks India.
The board of ZEEL has provided in-principle approval to the merger that would also see SPNI infusing growth capital of about $1.575 billion into the new merged entity for use in pursuing other growth opportunities.
The merger is in line with ZEEL’s strategy of achieving higher growth and profitability as a leading media and entertainment company across South Asia.
The merger would not have come at a more opportune time for both the entities which were scurrying for newer initiatives to stay relevant in the highly-competitive market with wide scale transformation in Indian television landscape with increasing penetration of broadband services and regular launches of streaming video platforms.
SPNI has been present in India since 1995. But the network has not had a smooth run to either monetise its operations or expand it further from the present 26 TV channels, a film production and distribution unit and the widely-viewed streaming platform, SonyLIV.
ZEEL, on the other hand, has been fighting worsening financial conditions with its debt shooting up. The entity operates 66 linear television channels across 171 countries and is attempting to build the reach of its streaming platform, Zee5, around the world.
In 2019, Essel (parent of Zee) brought in financial advisers Goldman Sachs to see whether the owners could sell their stake in ZEEL. Sony and Essel held talks on a possible merger or buyout of operations in 2019 as well, but the talks could not reach any degree of finality.
Sony-Zee merger on track (IANS)
Essel is also understood to have held talks with James Murdoch’s Lupa Systems and Comcast, but it resisted selling the stake to a business rival.
In 2019, an agreement was reached to sell 16.5 per cent stake in ZEEL to US investment group Invesco Oppenheimer Developing Markets Fund that is currently running a battle with the existing ZEEL management and has called for an EGM to remove them over reported violation of corporate governance norms.
The merger will try to correct some of these anomalies that would also see rejig of few channels, while further sharpening the entities streaming services.
