The National Company Law Tribunal has given the go ahead to the merger of Zee Entertainment Enterprises with Culver Max Entertainment (formerly Sony Pictures Networks India).
This deal will lead to the creation of India’s largest media company.
The ruling comes a month after the tribunal reserved its verdict after hearing objections from creditors on July 11.
Terms of the deal
As per the scheme of the arrangement, Sony will indirectly hold 50.86 per cent of the combined company.
The founder of Zee will own around four percent and the rest will be with the other shareholders of ZEEL.
Further, Sony Group will also pay a non-compete fee of Rs 1,100 crore to the Essel Group promoters.
Objections dismissed
It has dismissed all such objections raised by several creditors, including Axis Finance, JC Flower Asset Reconstruction, IDBI Bank, Imax Corp and IDBI Trusteeship.
A bench led by Justice Subba Rao while passing the order said, “..All objections against the merger have been rejected.”
Two years in the making
Unless some of these entities move the National Company Law Appellate Tribunal (NCLAT), this would be the final approval needed for the merger.
In September 2021, Zee announced plans to merge with Sony Pictures Networks India, a subsidiary of Japan’s Sony Corp after which they approached NCLT seeking approvals.
The deal will give way to the creation of the country’s largest media and entertainment company with standalone revenues of $2 billion.
Country’s largest media company
The merger would create a $10-billion media giant, with the combined entity owning over 70 TV channels, two video streaming services (Zee5 and SonyLiv) and two film studios (Zee Studios and Sony Pictures Films India).
It would be the country’s largest TV network company with a 26% market share.
It has already received approvals from the stock exchanges, Securities and Exchange Board of India, and the Competition Commission of India.
Promoters locked out
Media baron and chairman of Essel Group Subhash Chandra is a promoter of Zee, an Essel Group company.
In an interim order on June 12, Sebi had prohibited Chandra and his son Punit Goenka from assuming directorial or major managerial positions due to alleged misuse of funds from Zee for personal gain.
The Securities Appellate Tribunal imposed a one-year restraint on both from holding board positions in publicly listed companies, citing alleged fund diversion.
What next?
Now that the deal has received the requisite approvals, the two companies are likely to start the integration process by early next week.
ZEE will have 30 days to file with the registrar of companies, following which, the shares of the company will be delisted from the stock exchanges.
The merged company will get re-listed in another six weeks.
Merger and acquisition experts feel that it should be done by mid-November.
