Japan’s Sony Group scrapped plans on Monday for a $10 billion (roughly Rs. 83,098 crore) merger of its Indian unit with Zee Leisure, ending a deal that might have created one of many South Asian nation’s largest TV broadcasters.
The collapse of the deal in content-hungry India creates extra uncertainty for TV broadcaster Zee specifically as competitors heats up, with Disney additionally in search of to merge its Indian companies with the media belongings of billionaire Mukesh Ambani’s Reliance.
Zee informed Indian inventory exchanges Sony was in search of $90 million (roughly Rs. 747 crore) in termination charges for alleged breaches of their merger settlement and emergency interim reduction by “invoking arbitration”. Zee mentioned it denies all claims made by Sony and would take applicable authorized motion.
Sony mentioned in an announcement sure “closing situations” to the merger weren’t happy regardless of “good religion discussions” with Zee, and the businesses had been unable to agree upon an extension by their January 21 deadline.
“After greater than two years of negotiations, we’re extraordinarily disillusioned … We stay dedicated to rising our presence on this vibrant and fast-growing market,” it added.
Whereas neither Sony nor Zee elaborated on Monday on which situations had been unfulfilled, a stalemate over who will lead the mixed firm had put the merger at risk.
Zee had proposed that CEO Punit Goenka take the helm, however Sony balked after he turned the topic of an investigation by India’s market regulator. Zee mentioned on Monday Goenka had been “agreeable to step down within the curiosity of the merger”.
A supply with direct information nevertheless mentioned Sony was not eager to proceed until Goenka backed out earlier than the closure of the merger, relatively than after the deal had been sealed as he had proposed.
‘An indication from the lord’
Final yr, the Securities and Change Board of India barred Goenka from holding directorships at any listed firm, accusing him of being concerned in diverting Zee’s funds to the group’s different listed entities.
Goenka denied the allegations. An Indian tribunal lifted the ban on him in October however mentioned he must cooperate with any investigation by the regulator.
The manager, who was in India’s Ayodhya metropolis to attend the grand opening of a Lord Ram temple, wrote on X that he sees the collapse of the Sony deal as “an indication from the Lord”, including he would transfer ahead by strengthening his firm for stakeholders.
Zee is at present contending with declines in promoting income and money reserves. Its money reserves fell to Rs. 2.48 billion within the six months ended September 30 from Rs. 5.88 billion a yr earlier.
The Indian firm mentioned it had undertaken a number of steps for the Sony deal leading to “one-time and recurring prices”, however will now “proceed to judge natural and inorganic alternatives for progress”.
With channels in segments like information and leisure in Hindi and different languages, Zee has for years been a family title in India. It was arrange in 1992 by Subhash Chandra, Goenka’s father, who is usually dubbed the “Father of Indian Tv”.
Sony, which too has leisure channels in India and a streaming service, along with Zee would have had a portfolio of 90 plus channels.
“The failure of the Zee-Sony merger can be disappointing for shareholders – this merger had the potential to materially change business dynamics,” mentioned Hetal Dalal, president and chief working officer of Institutional Investor Advisory Companies.
Sony mentioned it didn’t count on any materials influence from the termination to its estimates for the yr ending in March, because it had not factored the deal into its outlook.
Zee shares are down about 8 p.c from their ranges earlier than the merger was first introduced in September 2021.
© Thomson Reuters 2024
