Zee Entertainment and Sony Pictures Networks India Private Limited (SPNI) have signed definitive agreements to merge the two entities. The amalgamation will combine the linear networks, digital assets, production operations and program libraries under the two media giants, creating the second largest entertainment network in the country.

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.

“The agreements follow the conclusion of an exclusive negotiation period during which ZEEL and SPNI conducted mutual due diligence. After closing, the new combined company will be publicly listed in India,” a joint statement by the two companies stated.

The closing of the transaction is subject to certain customary closing conditions, including regulatory, shareholder, and third-party approvals, it further added.

After the deal is closed, Sony Pictures Entertainment (SPE), the parent company of SPNI, will indirectly hold a majority 50.86% of the combined entity. Meanwhile, the ZEEL founders will hold 3.99%, and the other ZEEL shareholders will hold a 45.15% stake.

By virtue of the shareholding pattern, shareholders approval will be crucial for completing the deal as it can be closed only after three-fourth of them support the merger. Notably, the merger deal has been signed as Zee Entertainment is engaged in a legal battle with its largest investor Invesco for the control of the company.

Once the Zee-Sony deal is finalised, Punit Goenka, the incumbent ZEEL CEO, will lead the merged entity as its managing director and CEO. Sony Group will nominate most of the directors on the board of the new entity, including N.P. Singh, the current SPNI managing director and CEO. On closing, Singh will assume a broader executive position at SPE as Chairman, Sony Pictures India (a division of SPE), reporting to Ravi Ahuja, SPE’s chairman of global television studios and SPE corporate development.

Also, as part of the definitive agreements, the ZEEL promoters have agreed to limit the equity that they may own in the combined company to 20% of its outstanding shares. This construct does not provide them any pre-emptive or other rights to acquire equity of the combined company from the Sony Group, the combined company or any other party, the joint statement clarified.

Any shares the ZEEL promoters buy in the merged entity must be in compliance with all applicable laws including any pricing guidelines.

“The combined company will create a comprehensive entertainment business, enabling us to serve our consumers with wider content choices across platforms,” said ZEEL CEO Punit Goenka. “I am most certain that our collective wisdom, rich experience and expertise will lead to a more value accretive and exciting company for our shareholders and employees, and a more engaging one for our customers and partners.”

“Today marks an important step in our efforts to bring together some of the strongest leadership teams, content creators, and film libraries in the media business to create extraordinary entertainment and value for Indian consumers,” said Ravi Ahuja, SPE’s Chairman of Global Television Studios and SPE Corporate Development.

“This merger will create a company that’s best in class and will redefine the contours of the media and entertainment industry. As a representative of SPE on the Board of the new merged company, it will be my endeavour to provide strategic guidance and support to the company’s operating team in achieving our vision,” said SPNI CEO N.P. Singh.

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