Board approval for ZEEL-Sony merger: Sony will have 50.86% stake in the new company, Puneet Goenka will be the MD and CEO of the company
The board of Zee Entertainment Enterprises Limited (ZEEL) has approved the merger with Sony Pictures Networks India. Sony will hold 50.86% in the new company, while ZEEL’s promoter group Essel will hold 3.99%. The shareholders of ZEEL will hold 45.15% stake. The value of the merged NTT will be around Rs 52100 crore. This value is much less than what the market experts were expecting.
Zee currently holds 96.05 crore shares, post-merger their stake will increase to 173.63 crore. The promoters of Zee will get a non-compete fee of Rs 1101 crore. They will infuse this money in the merger. Promoters will buy over 3.67 crore shares at Rs 300 per share in the new company to retain 3.99% stake. Public shareholders will get 85 shares for 100 shares of ZEEL in the new company.
The merger between the two companies was announced on 22 September 2021. The 90-day due diligence period ended on December 21.
Sign binding agreement
Both the companies have signed the binding agreement. The binding agreement means that now the merger of ZEEL will be with Sony only. There was a non-binding agreement between the two companies for the first 90 days. Meaning, for 90 days, both the parties could back down if they wanted. But, after 90 days of negotiation and negotiation, both the companies have approved the merger. As per the deal, Sony will invest $1.5 billion and hold a 50.86% stake in the merged company.
Puneet Goenka will continue as MD and CEO of the company
The nine-member board of the new company will consist of five Sony executives and Puneet Goenka as the company’s MD and CEO for the next five years. After this merger, the company will be listed on the Indian stock exchange.
Puneet Goenka calls merger a milestone
After the board approved the merger, Puneet Goenka said, “It is a milestone for all of us as two leading media and entertainment companies have joined hands to drive the Next Era of Entertainment.
The new company will create a comprehensive entertainment business that will enable us to offer our consumers a wide range of content choices across platforms. I am very grateful to the teams of ZEEL, SPE and SPNI for their efforts, which took us to this point in a speedy manner within the stipulated time frame.
Shares fall 3% after deal approval
After the approval of the merger, the stock of ZEEL is seeing a decline of about 3%. The stock had closed yesterday i.e. on Tuesday at Rs 349 on BSE. This morning it opened down by Rs 2 at Rs 347 and made a high of Rs 358. The stock also made a low of Rs 332.75. At 10.30 am, it was trading at Rs 338.10, down by Rs 10.90 (3.12%).
Benefits for both ZEEL and Sony Pictures
As part of this merger, both Zee Entertainment and Sony Pictures will merge their respective liner networks, digital assets, production business and program libraries.
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