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Thursday, January 27, 2022

ZEEL, Sony seal deal to merge

The combined entity, nearly 51% owned by Sony Pictures Networks India (SPNI), will own popular channels such as Sony MAX and Zee TV, along with streaming platforms ZEE5 and SonyLIV, as part of the deal.

By: ENS Economic Bureau | Bengaluru |
Updated: December 23, 2021 12:20:47 am
Zee Entertainment Enterprises Ltd (ZEEL) (File Photo)

Three months after announcing a merger proposal, Sony Pictures Networks India Pvt Ltd (SPNI) and Zee Entertainment Enterprises Ltd (ZEEL) on Wednesday said they have signed definitive agreements to merge ZEEL with SPNI and combine their linear networks, digital assets, production operations and programme libraries.

The structure remains as per earlier announcement, with Sony holding 51 per cent stake in the entity and promoters holding 4 per cent while the rest will be held by the public. The merger proposal was first announced on September 22 after Invesco, the largest shareholder of ZEEL, sought an extraordinary general meeting of ZEEL for the removal of Punit Goenka, MD and CEO, and appointment of six directors. The agreements follow the conclusion of an exclusive negotiation period. After closing, the new combined company will be publicly listed. Under the terms of the definitive agreements, SPNI will have cash balance of $1.5 billion at closing, including through infusion by current shareholders of SPNI and the promoters of ZEEL — the Subhash Chandra family.

Under the transactions contemplated by a non-compete agreement, Sony Pictures Entertainment (SPE), through a subsidiary, will pay a non-compete fee to certain promoters (founders) of ZEEL, which will be used by such promoters to infuse primary equity capital into SPNI, entitling the promoters of ZEEL to acquire shares of SPNI, which would eventually equal approximately 2.11 per cent of shares of the combined company on a post-closing basis. After the closing, SPE will indirectly hold a majority 50.86 per cent of the combined company, the promoters (founders) of ZEEL will hold 3.99 per cent and other shareholders 45.15 per cent. Goenka will be the combined company’s managing director and CEO. The majority of the board of directors of the combined company will be nominated by Sony group and will include current SPNI MD and CEO N P Singh.

The promoters of ZEEL had agreed to limit the equity that they may own in the combined company to 20 per cent of its outstanding shares. “This construct does not provide the promoters of ZEEL any pre-emptive or other rights to acquire equity of the combined company from the Sony Group, the combined company or any other party…,” it said.

Goenka said, “This merger presents a significant opportunity to jointly take the businesses to the next level.”

Holding pattern

The structure remains as per the earlier announcement, with Sony holding 51% stake in the entity and promoters holding 4%, while the rest will be held by the public

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