Mumbai: There was speculation that the investor action against the promoter family at Zee Entertainment Enterprises would force the board to take some action. And it has: early this morning Zeel announced that the board has approved a merger proposal between Sony Pictures Networks India (SPNI) and India’s largest troubled media entity.
The merger will result in SPNI holding a majority of 52.93 per cent with Zeel and its shareholders having 47.01 per cent of the new entity which will continue to list on the stock exchanges. The joint company will appoint Punit Goenka as the CEO and managing director, with the promoter family being free to increase its holding from four per cent to 20 per cent over time. The combined company’s Board of directors would include directors nominated by Sony Group and result in Sony Group having the right to nominate the majority of the Board members.
SPNI shareholders have committed to pump in growth capital of $1.575 billion (Rs 11,575.92 crores) into the Indian company to enhance the combined company’s digital platforms across technology and content, ability to bid for broadcasting rights in the fast-growing sports landscape and pursue other growth opportunities.
A non-binding term sheet giving the two companies 90 days to conduct mutual due diligence and come to a definitive agreement. A final transaction would be subject to completion of customary due diligence, negotiation, and execution of definitive binding agreements, and required corporate, regulatory, and third-party approvals, including Zeel shareholder vote.
The agreement will combine the two companies' linear networks, digital assets, production operations, and program libraries. “The combined company would be a publicly listed company in India and be better positioned to lead the consumer transition from traditional pay TV into the digital future,” said SPNI in a statement.
The merger was unanimously approved by the Zeel Board in a meeting held on Tuesday, where it evaluated the agreement on the financial parameters as well as the strategic value which SPNI brings to the table.
“We have unanimously provided an in-principle approval to the proposal and have advised the management to initiate the due diligence process,” said Zeel chairman R. Gopalan said, "Zeel continues to chart a strong growth trajectory and the Board firmly believes that this merger will further benefit Zeel. The value of the merged entity and the immense synergies drawn between both the conglomerates will not only boost business growth but will also enable shareholders to benefit from its future successes. As per legal and regulatory guidelines, at the required stage, the proposal will be presented to the esteemed shareholders of Zeel for their approval.”
