Zee Enterprises Board of Directors Approves Merger with Sony Pictures, Punit Goenka to Remain Managing Director and CEO

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Zee Entertainment Enterprises (ZEEL) announced on Wednesday that its board of directors, at a meeting held on September 21, unanimously approved the merger with Sony Pictures Networks India (SPNI) in principle. Zee shares jumped more than 20% on BSE on Wednesday when news of the deal began.

As part of the transaction, Punit Goenka will continue to be the Managing Director and CEO of the merged entity.

Zee, which has a presence in broadcast and digital media with brands such as Zee TV, has come under pressure from leading investors like Invesco who last week called for the removal of its three directors, including the exit of the general manager, Punit Goenka, of the table.

Sony Pictures shareholders will hold a controlling interest in the merged entity. They will also inject growth capital into SPNI as part of the merger, so that SPNI has approximately $ 1.575 billion at closing to use in pursuing other growth opportunities.

Based on the current estimated equity values ​​of ZEEL and SPNI, the indicative merger ratio would have been 61.25% in favor of ZEEL. However, with the proposed injection of development capital into SPNI, the resulting merger ratio is expected to result in 47.07% of the merged entity owned by ZEEL shareholders and the remainder at 52.93% of the entity merged by the shareholders of SPNI.

Zee & Sony have entered into a non-binding list of conditions to combine linear networks, digital assets, production operations and program libraries of the two companies. The term sheet provides for an exclusive period of 90 days during which the two parties will conduct mutual diligence and finalize the definitive agreement (s). The merged entity will be a publicly traded company in India.

Santosh Meena, Head of Research at Swastika Investmart Ltd, said: “The recent announcement of a deal with Sony will be a very positive trigger for Zee ltd. The agreement will bring good synergy to both the company to develop its activities and the combined entity will become the largest player in the industry. “

Meena added that the stock is trading at very attractive valuations and is one of the strongest and preferred FII stocks in the media space and if this deal goes through we could see a strong revaluation in the counter. Technically, “it is seeing a break in the downward channel formation and manages to move above its very important moving averages where 300 is an immediate and psychological hurdle; above that it is likely to head for 350 mark. On the downside, 250 has become a strong support mark, ”he said.

Zee, in an exchange brief on Wednesday, said the board of directors concluded that the merger would be in the best interests of all shareholders and stakeholders and that it was in line with ZEEL’s strategy to achieve a higher growth and profitability as a leading media and entertainment company in South Asia. .

It is expected that the final transaction will be subject to the completion of customary due diligence and execution of definitive agreements and required approvals from companies, regulators and third parties, including votes from Zee shareholders.

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