A month after reserving its order, the National Company Law Tribunal (NCLT) has today given its nod to the merger proposal of media & entertainment major Zee Entertainment Enterprises Ltd with Sony Networks India (now known as Culver Max Entertainment).

ZEEL had earlier said the merger scheme was approved by 99.97% of its shareholders and other regulators like the Bombay Stock Exchange (BSE), National Stock Exchange (NSE), and Competition Commission of India (CCI).

The merger deal received a nod from the Competition Commission of India (CCI) on October 4, 2022, while it got a green signal from the domestic bourses - BSE and NSE - in July 2022.

Reacting to the development, the ZEEL shares surged as high as 16.03% to hit a 52-week high at ₹290.5 on the BSE. The shares opened a gap up at ₹243.05 today and surged to an intra-day high of ₹290.5 before settling at ₹281 at the end of the trading session. At the current share price, ZEE's market capitalisation stands at ₹27,038.62 crore.

The NCLT approval comes many months after the deal was announced in December 2021 to merge the two big entities to create the largest entertainment network in the country. However, ZEE faced several hurdles and delays due to ongoing legal battles with capital markets regulator SEBI.

In June 2023, leading investment banking and broking firm BofA Securities said ZEE's fundamentals were deteriorating on "weak business", risk on the merger front, and the SEBI probe. Bofa said there's no clarity about which way the SEBI order will go as the case is pending before the appellate forum.

The merger will make the combined entity the largest media conglomerate in India, with a 28% share (leaving behind the current market leader, Disney-Star, with a 22% share). The combined entity will include 75 TV channels, two film studios – Zee Studios and Sony Pictures Films India, as well as two video streaming services – ZEE5 and Sony LIV, and digital content studio Studio NXT, which is currently under Sony Pictures Network.

Also, Sony Pictures Entertainment, through its Indian entity, SPNI, will indirectly hold a majority of 50.86% of the combined company, the promoters (founders) of ZEEL will hold 3.99%, and the other ZEEL shareholders will hold a 45.15% stake.

In a major blow to the company, the SEBI on June 12, 2023, restricted its promoters, Essel Group chairman Subhash Chandra and his son and Zee managing director and chief executive Punit Goenka, from taking directorial roles in listed companies. SEBI also sought "urgent action" against the promoters of ZEE in the ₹200-crore fund diversion case, alleging the said promoters indulged in violations as well as multiple "false disclosures" to cover up their "wrongdoings".

Goenka was supposed to lead the merged entity as its managing director and CEO, though the merging companies are now yet to clear the air on that issue.

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