The Board of Directors of Zee Entertainment Enterprises Ltd (ZEEL), on September 22, granted in-principle approval for the merger of ZEEL and Sony Pictures Networks India( SPNI).
“The board has evaluated not only on financial parameters but also on the strategic value which the partner brings to the table. The board concluded that the merger will be in the best interest of all the shareholders and stakeholders,” the Indian media house said in a statement.
The shares of Zee Entertainment, on Thursday, opened at a gap up the price of Rs 281.5 on NSE, up Rs 25.55 from the previous day close of Rs 255.70. The shares of the company during intraday zoom 31.75%, marking a close of Rs 336.80 as the company has signed a merger deal with Sony Pictures India
Key Points Of Zee-Sony Deal-
The two companies have entered into a non-binding term sheet to consolidate both companies’ linear networks, digital assets, production operations and program libraries. The term sheet provides a 90 days window during which ZEEL and Sony Pictures need to conduct mutual due diligence, a process in which the companies examine the financial records before they finalize the definitive agreements.
The merged entity will be publicly listed in Indian bourses. Sony’s shareholders will have a 52.93% stake in the merged company against $1.575 billion, while ZEEL shareholders will be left with 47.07% of the entity.
Currently, 96.01% of Zee Ent. shares are public, while 3.99% are owned by its promoters.
“The merger is in line with ZEEL’s strategy of achieving higher growth and profitability as a leading media and entertainment company across South Asia,” according to a statement from ZEEL.
Mr Punit Goenka will retain his position of Managing Director (MD) and CEO in the merged entity. Decision-making power to appoint the majority of directors in the newly formed entity will be with promoters of Sony.
”ZEEL continues to chart a strong growth trajectory and the Board firmly 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,” said Mr R. Gopalan, Chairman, Zee Entertainment.
”As per legal and regulatory guidelines, at the required stage, the proposal will be presented to the esteemed shareholders of ZEEL for their approval,” added Mr Gopalan.
Zee Entertainment is one of the major television broadcasters and digital media that runs the daily soap channels like Zee TV and &Tv. The top shareholders-Invesco Developing Markets Fund and OFI Global China Fund Llc of the company since last week were in favour to oust Punit Goenka following the resignations of Ashok Kurien and Manish Chokhani, two independent directors and potential management rejig was on cards.
A week later, the company announced the merger. This gives an immense opportunity to ZEEL to strengthen its OTT game post-merger.
In the first quarter of fiscal 22, ZEEL generated revenues of Rs 111 crore but operating costs of Rs 315 crore engulfed the sales.
Whereas, Sony Pictures booked Rs 582 crore in profit after tax for FY21, Rs 896 crore down from the previous year. But, the analysts’ estimations say that the combined profit for Zee and Sony could be roughly Rs 2,500 crore in FY23 if the companies manage to recoup the numbers.
“The board has evaluated not only on financial parameters but also on the strategic value which the partner brings to the table. The board concluded that the merger will be in the best interest of all the shareholders and stakeholders,” the Indian media house said in a statement.