Zee Entertainment Enterprises Ltd (ZEE) has reached a comprehensive settlement with Culver Max Entertainment Pvt Ltd (CMEPL), operating as Sony Pictures Networks India (SPNI), and its affiliate Bangla Entertainment Pvt Ltd (BEPL). This non-cash agreement effectively resolves all disputes related to their previously planned merger. It also includes the withdrawal by all parties' claims for the US$90mn (million) termination fee, damages, litigation costs and other expenses related to the failed merger.
The settlement announced on 27 August 2024, outlines that all parties will withdraw their claims in the ongoing arbitration at the Singapore International Arbitration Centre (SIAC). Additionally, they will cease all related legal proceedings before the national company law tribunal (NCLT) and other relevant forums. As part of the agreement, the companies will also retract their respective composite schemes of arrangement (CSA) from the NCLT and inform the appropriate regulatory authorities.
This resolution marks the end of what could have been a US$10bn (billion) merger deal, which was initially approved by the NCLT's Mumbai bench on 10 August 2023. The merger, if successful, would have created India's largest entertainment network, boasting over 70 TV channels, two video streaming services (ZEE5 and Sony LIV), and two movie studios (Zee Studios and Sony Pictures Films India).
The newly reached settlement stipulates that no party will have any remaining or ongoing obligations or liabilities towards the others. Both companies have agreed to relinquish all rights to file claims or counterclaims against each other concerning the transaction documents, their termination, and implementation.
Following the announcement, Zee Entertainment's share price experienced a significant surge Tuesday, closing 11.56% higher at Rs150.83 per share. The stock had reached an intraday high of Rs154.9 before settling.
Both Zee and Sony have expressed their intention to pursue future growth opportunities independently, with a renewed focus on the evolving media and entertainment landscape. This mutual understanding and the resulting settlement signify the definitive conclusion of all disputes between the two media giants.
The resolution allows both companies to move forward without the burden of ongoing legal battles, potentially opening new avenues for growth and strategic partnerships in India's dynamic media and entertainment sector.
In December 2021, Sony and Zee announced that they would integrate their television stations, film assets and streaming platforms to build a media and entertainment powerhouse with a large base of 1.4bn viewers.
Under the terms of the deal, Sony would have owned 53% of the merged company, with Punit Goenka as the managing director and chief executive officer (MD & CEO) of the new entity.
Founders of ZEE had to dilute their stake in the company to tackle debt in 2019, and the Sony deal was struck amid a 2021 boardroom conflict with an overseas shareholder.
In October 2022, the Competition Commission of India (CCI) approved the Sony-Zee merger based on several conditions. CCI also imposed limits to prevent Zee Sony from abusing its dominating market position.
CCI had stated in a 21-page notice that its initial assessment showed the proposed deal would leave the merged business in a 'strong position' with roughly 92 channels in India, citing Sony's global revenue of US$86bn and assets of US$211bn.
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