Zee Entertainment Enterprises Ltd (ZEEL) has filed a petition in the National Company Law Tribunal (NCLT) against Sony Group for terminating the merger deal between the two media giants. ZEEL has denied any breach of obligations and has contested Sony’s claim for a $90 million termination fee. ZEEL has also sought directions from the NCLT to implement the merger scheme, which was previously sanctioned by the tribunal.
The merger deal, which was announced in September 2020, was supposed to create India’s largest media and entertainment company with a combined revenue of over $10 billion. However, on Monday, Sony sent a termination letter to ZEEL, alleging that ZEEL had violated the merger conditions and failed to satisfy certain closing requirements. Sony also demanded a break-off fee of $90 million from ZEEL for calling off the deal.
ZEEL, however, refuted Sony’s allegations and said that it had complied with all its obligations in good faith. ZEEL also said that Sony’s claim for the termination fee was legally untenable and had no basis whatsoever. ZEEL asserted that Sony’s subsidiaries Culver Max Entertainment and Bangla Entertainment Pvt Ltd were in default of their obligations to give effect to and implement the merger scheme, which was sanctioned by the NCLT in July 2021.
On Wednesday, ZEEL approached the NCLT, seeking directions to urge Sony to adhere to the merger conditions and implement the scheme. ZEEL also initiated appropriate legal action to contest Sony’s claims in the arbitration proceedings before the Singapore International Arbitration Centre (SIAC).
The termination of the merger deal has come as a setback for ZEEL, which is facing a boardroom battle with its largest shareholder Invesco Developing Markets Fund. Invesco, which owns 18% stake in ZEEL, has sought to remove the current managing director and chief executive officer Punit Goenka and appoint six new independent directors on the board. ZEEL has resisted Invesco’s move and has called for an extraordinary general meeting of shareholders on February 18 to decide on the matter.