ZEE-Sony merger gets nod from stock exchanges; share jumps 5%

Shares of Zee Entertainment Enterprises climbed 5% in early trade on Monday after the media conglomerate received approval from the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) for its proposed merger with Culver Max Entertainment (formerly Sony Pictures Networks India). The nod from domestic exchanges will permit the broadcaster to proceed with the next steps in the overall merger process, which is subject to applicable regulatory and other requisite approvals. Now, the company will file the merger application with National Company Law Tribunal (NCLT), Mumbai Bench.

“The approval from the stock exchanges marks a firm and positive step in the overall merger approval process. The approvals permit the company to proceed with the next steps in the overall merger process. The Composite Scheme of Arrangement remains subject to applicable regulatory and other approvals,” Zee Entertainment said in an exchange filing on July 29.

Reacting to the news, Zee Entertainment shares opened higher at 248.65, against the previous closing price of ₹247.10 on the BSE. During the session so far, the stock gained as much as 4.98% to touch an intraday high of ₹259.40 on the BSE, in sync with the benchmark index Sensex, which rose 370 points to 57,940 levels. The media heavyweight hit a 52-week high of ₹378.60 on December 15, 2021, and a 52-week low of ₹166.80 on August 23, 2021.

In December last year, Zee Entertainment and Sony Pictures Networks India Private Limited (SPNI) had entered into a deal to merge the two entities to create the largest entertainment network in the country. The merger would 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.

Once the regulatory approvals come through 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 45.15% stake. The new board would comprise nine members, out of which five would be nominated by SPNI, three would be independent members and Punit Goenka would also get a position in the board.

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. Post merger, 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.