Zee Entertainment Enterprises Ltd said on Wednesday that « good faith negotiations » would be held with the India division of Japan-based Sony Group to discuss an extension of the merger deadline.
The deal to create a $10 billion media and entertainment powerhouse was first announced two years ago but was delayed due to regulatory and other uncertainties.
« The Company has now received communication from Bangla Entertainment Private Limited (« BEPL ») and Culver Max Entertainment Private Limited (formerly known as Sony Pictures Networks India Private Limited) (« CMEPL ») stating that they will enter into a good faith agreement. negotiations as required by the Merger and Cooperation Agreement (MCA) entered into between the parties, the Company, CMEPL and BEPL, with a view to discussing the extension of the date required for the project to enter into force. into force within a reasonable period of time,” Zee said in a stock exchange filing.
CMEPL is an indirect, wholly-owned subsidiary of Sony Group Corporation (SGC). BEPL is also a wholly owned indirect subsidiary of SGC and is part of the SGC Group.
Sony Group Corp’s Indian arm said on Tuesday it has not yet agreed to extend the merger deadline with Zee Entertainment, days after the latter requested an extension.
“(Zee’s) notice triggers an existing contractual provision in the agreement that allows both parties to discuss the possibility of extending the deadline,” Sony Pictures Networks India (SPNI) said in a statement.
“SPNI is required to begin these conversations but has not yet agreed to an extension of the deadline,” he said, adding that it would hear Zee’s proposals and how it plans to fulfill the conditions of closing remaining reviews.
In August this year, the Mumbai bench of the National Company Law Tribunal (NCLT) also gave the go-ahead to the merger of ZEALOUS and Culver Max Entertainment. As per the agreements, ZEEL MD & CEO Punit Goenka is to head the merged entity. However, according to some reports, CMEPL is now insisting on giving way to NP Singh, head of Sony Pictures Network.
This followed an interim order by Sebi barring Essel Group Chairman Subhash Chandra and Zee Entertainment Enterprises Ltd Managing Director and CEO Punit Goenka from holding the position of directors or key management personnel in a listed company. The market regulator took this action after it was found embezzling funds from the company.
Chandra and Goenka have moved the Securities Appellate Tribunal (SAT) challenging Sebi’s interim order. In October, the SAT set aside the Sebi interim order.
Earlier in September 2021, Sony Pictures Networks India (SPNI) and ZEEL had entered into a non-binding agreement to bring together their linear networks, digital assets, production operations and program libraries.
The combined entity will own over 70 television channels, two video streaming services (ZEE5 and Sony LIV) and two movie studios (Zee Studios and Sony Pictures Films India), making it the largest entertainment network in India.
Subsequently, the two parties signed a definitive agreement for their merger in December 2022.
As per the deal, Punit Goenka, Managing Director of ZEEL, was to lead the merged company as Managing Director and CEO.
The majority of board members of the combined entity would be appointed by the Sony Group and would include current SPNI Managing Director and CEO NP Singh.
However, questions over the future of the merger have arisen after Sebi’s actions against Chandra and Goenka for siphoning off funds from ZEEL.
The proposed merger has already been approved by ZEEL shareholders and sector regulators, including the Competition Commission of India.
