Zee Entertainment on Wednesday announced that its board members has given an in-principle approval for merger between ZEE Entertainment Enterprises Ltd (ZEEL) and Sony Pictures Networks India (SPNI). “The Board of Directors of ZEE Entertainment Enterprises Limited (ZEEL) present and voting in its board meeting held on 21st September 2 021, unanimously provided an in-principle approval for the merger between Sony Pictures Networks India (SPNI) & ZEEL,” the company said in a regulatory filing.
The shareholders of Sony Pictures will hold a majority stake in the merged entity. As per the transaction, Zee Entertainment will hold 47.07 per cent stake in the merged entity, while Sony Pictures Networks have a control over 52.93 per cent stake. Punit Goenka will continue to be the managing director and CEO of the merged entity, as per the transaction.
“The Board of Directors at ZEEL have conducted a strategic review of the merger proposal between SPNI and ZEEL. As a Board that encompasses a blend of highly accomplished professionals having rich expertise across varied sectors, we always keep in mind the best interests of all the shareholders and ZEEL. We have unanimously provided an in-principle approval to the proposal and have advised the management to initiate the due diligence process,” said R. Gopalan, chairman, ZEE Entertainment Enterprises Ltd.
“The merger is in line with ZEEL’s strategy of achieving higher growth and profitability as a leading Media & Entertainment Company across South Asia,” the company said in a statement.
Sony Group will have the right to nominate majority directors on the board of the merged entity. As a part of the transaction, ZEEL & SPNI will combine both companies’ linear networks, digital assets, production operations and program libraries.
As a part of the agreement, Sony Pictures will also “infuse growth capital into SPNI as part of the merger such that SPNI has approximately $1.575 billion at closing, for use in pursuing other growth opportunities,” the company said in a regulatory filing.
Zee Entertainment and Sony Pictures have entered into a non-binding term sheet to combine both companies’ linear networks, digital assets, production operations and program libraries. The term sheet provides an exclusive period of 90 days during which the two parties will conduct mutual diligence and finalise definitive agreement(s). The merged entity will be a publicly listed company in India.
Punit Goenka will continue to be the MD and CEO of the merged entity. Further, certain non-compete arrangements will be agreed upon between the promoters of ZEEL and the promoters of Sony Pictures. The promoter family is free to increase its shareholding from the current 4 per cent to up to 20 per cent, in a manner that is in accordance with applicable law, the term sheet mentioned.
“Zee Entertainment continues to chart a strong growth trajectory and the Boardfirmly believes that this merger will further benefit ZEEL. The value of the merged entity and the immense synergies drawn between both the conglomerates will not only boost business growth but will also enable shareholders to benefit from its future successes. As per legal and regula tory guidelines, at the required stage, the proposal will be presented to the esteemed shareholders of ZEEL for their approval,” Gopalan said.
“The final transaction would be subject to completion of customary due diligence and execution of definitive agreements and required corporate, regulatory and third party approvals, including the votes of Zee’s shareholders,” the company mentioned in the BSE filing.
Shares of Zee Enetertainment surged 10 per cent to ₹281 apiece on the BSE in Wednesday’s early trade following the deal announcement.
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