According to people familiar with the situation, Sony Group Corp. intends to renounce the merger agreement it had with Zee Entertainment Enterprises Ltd., ending two years of turmoil and delaying the establishment of a $10 billion media conglomerate.
Read on to find out all the details!
Sony and Zee To Renounce Merger
According to people who asked not to be identified because the information is private, the Japanese conglomerate is looking to back out of the agreement because of a disagreement over whether Punit Goenka, the son of the company’s founder and chief executive officer of Zee, would lead the combined company.
According to the people, Sony no longer wants Goenka as CEO in the wake of a regulatory investigation, despite the agreement signed in 2021 that he would lead the new company.
According to one of the people, Sony intends to file the termination notice prior to the extended deadline of January 20th for concluding the deal, claiming that certain requirements for the merger have not been satisfied. Another person claims that during lengthy meetings over the past few weeks, Goenka has maintained his position that he wants to lead the combined entity, as was originally agreed.
The two parties are still in communication, so a resolution may still be reached before the deadline.
Emails and phone calls requesting comment were not immediately answered by representatives for Sony and Zee.
Intentions Behind Sony-Zee Merger
The goal of the Sony-Zee merger was to build a $10 billion media conglomerate with the resources to compete with regional titans like Reliance and worldwide giants like Netflix Inc. and Amazon.com Inc.
Based in Mumbai, Zee had earlier asked for a one-month extension of the deadline of December 21. When it came to finalizing the “remaining critical closing conditions,” Sony stated that it was interested in hearing Zee’s suggestions.
Zee’s founder, Subhash Chandra, allegedly staged the recovery of loans in order to cover private financing deals, according to allegations made by the Securities and Exchange Board of India in June. SEBI said in an interim order that Chandra and his son Goenka “abused their position” and siphoned off funds. As a result, SEBI barred Goenka from positions as an executive or director in listed companies.
