The merger of Zee Entertainment Enterprises (ZEEL) and Sony Pictures Network India (SPNI), which was approved by the National Company Law Tribunal (NCLT) in August 2023, is facing a legal challenge from a ZEEL shareholder. Mad Men Film Ventures, a ZEEL shareholder, has filed a petition in the NCLT requesting both ZEEL and Sony to implement the merger scheme as per the NCLT order. The petition comes after Sony Group Corp announced on January 22, 2024, that it was terminating the merger agreement due to non-fulfillment of closing conditions by ZEEL.
NCLT Issues Notice to Sony
The Mumbai-bench of NCLT has accepted the petition by Mad Men Film Ventures and issued a notice to Sony, now known as Culver Max, to file a reply within three weeks. The NCLT has also kept the next date of hearing on this matter on March 12, 2024. The tribunal did not agree to the arguments made by the counsel stating that the approval by NCLT was conditional and depended on various conditions, which may be fulfilled or waived off in writing.
Merger Could Create a $10 Billion Media Enterprise
The merger of ZEEL and SPNI, which was announced in December 2021, could have created a $10 billion media enterprise in India, with a combined market share of over 40% in television viewership and over 30% in advertising revenue. The deal stipulated that the merger was to be completed before December 21, 2023, including regulatory and other approvals with a grace period of one month to complete the transaction. However, the merger hit a roadblock over who will lead the merged entity, with ZEEL’s board rejecting Sony’s proposal to appoint its nominee as the managing director and chief executive officer.
What Next for ZEEL and Sony?
The legal battle over the merger scheme is likely to prolong the uncertainty for both ZEEL and Sony, which are facing stiff competition from other players in the media and entertainment industry. While ZEEL is undergoing a boardroom reshuffle after its former managing director Punit Goenka resigned following a shareholder revolt, Sony is looking for new growth opportunities in India after losing its cricket broadcasting rights to rival Star India. The outcome of the NCLT proceedings will have a significant impact on the future of both companies and their shareholders.