22 Dec , 2021 By : monika singh
NEW DELHI: Shares of Zee Entertainment erased opening gains and slipped nearly 5 per cent in Wednesday's trade after the domestic entertainment major and Sony Pictures Networks India, a subsidiary of Sony Corp's Sony Pictures Entertainment, signed definitive agreements to merge the two companies.
As part of the proposed merger, ZEE will merge into SPN and after closing, the new merged company will be publicly listed in India.
The closing of the transaction is subject to certain customary closing conditions, including regulatory, shareholder, and third-party approvals, reports said.
Zee’s share price rose to a high of Rs 358 as against the previous close of 349 on the BSE in early trade, only to hit day's low of Rs 332.75, down 4.65 per cent.
Under the terms of the definitive agreements, SPN will have a cash balance of $1.5 billion (assuming an INR to USD ratio of 75:1) at closing, including through an infusion by the current shareholders of SPN and the promoters of ZEE, reports said.
The merger is set to create India's second-largest entertainment network by revenue and spawn an entity with 75 TV channels, two video streaming services (ZEE5 and Sony LIV), two film studios (Zee Studios and Sony Pictures Films India), a
THE LEGAL BATTLE
The development comes amid a lengthy legal battle over ownership between ZEE and its largest shareholder- US-based Invesco.
Invesco, which owns 17.88 per cent of ZEE, had asked the board to conduct an extraordinary general meeting (EGM) of shareholders to vote on the removal of MD and CEO Punit Goenka from the board. Subsequently, ZEE’s board rejected the demand and got an injunction against the offshore investor from the Bombay High Court.
Invesco has challenged the order before a division bench; that case is being heard. In parallel, the National Company Law Tribunal (NCLT) is hearing an application filed by Invesco against the domestic company.
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