The Zee Entertainment Ltd stock surged as much as 5.14% to close at ₹279.95, amid a rally in the market for the second straight day this week. The 30-share BSE Sensex surged 156 points or 0.27% to close at 58,222, whereas the NSE Nifty 50 index advanced 57 points or 0.33% to close at 17,331.
The development comes a day after the competition commission of India (CCI) approved the merger of Zee Entertainment Enterprises (Zee) and Sony Pictures Pictures Networks Limited (SPNI), while asking the two companies to ensure no unfair dominance in the market.
The merger will create the largest entertainment company in the country. According to Zee, the CCI has approved the merger of Zee Entertainment Enterprises Limited and Bangla Entertainment Private Limited with Culver Max Entertainment Private Limited (formerly Sony Pictures Networks India Private Limited).
“CCI approves amalgamation of Zee and Bangla Entertainment Private Ltd (BEPL) with Culver Max Entertainment Private Ltd (CME), with certain modifications,” the CCI said in a tweet.
The two television majors had announced about the merger in September last year. With the approved merger, SPNI will hold a 52.93% stake in the combined entity, whereas Zee will hold a 47.07%. The terms of the deal also include provision for Zee’s promoters to increase its stake from 4% to 20%.
This provision become a major point of legal contention between Invesco Developing Markets Fund, and Zee, which holds an 18% stake in the company along with OFI Global China Fund. In November last year, Invesco issued an open letter to other public shareholders of Zee, calling for the removal of Punit Goenka as the MD and chief executive of Zee.
It had also asked Zee, “why the founding family with 4% shares should benefit at the expense of investors who hold 96% stake”.
The Zee-Invesco issue was being argued at the National National Company Law Tribunal (NCLT), National Company Law Appellate Tribunal (NCLAT) and Bombay High Court. However, in March this year, Invesco said it supports the Zee-Sony merger and decided against pursuing the litigation. In April, the company sold its 7.8% stake worth ₹2,200 crore in Zee via block deals.