Mumbai : Phew! One more hurdle is set to get out of the way to create what could possibly end up being India’s largest media entertainment behemoth with the proposed merger of Zee Entertainment Enterprises Ltd (Zeel)  and Sony Pictures Networks India (SPNI).

The National Company Law Tribunal’s  (NCLT’s ) Mumbai bench has directed Zeel to convene a virtual shareholder meeting  on 14 October at 4 pm  to get their nod for the merger.

In July 2022 , Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) gave their approval. But the Competition Commission of India (CCI) has yet to give its approval as it is investigating how the fusion will affect market dominance. The NCLT direction was made last month but Zeel communicated this  to the Bombay stock exchange (BSE) only on 7 September.

"The ]NCLT  Mumbai bench has directed in its order, that a meeting of the equity shareholders of Zeel be convened and held on Friday, 14 October   for the purpose of considering, and, if thought fit, approving the proposed merger of the company with Culver Max Entertainment Pvt Ltd  (formerly SPNI Pvt Ltd)," read Zee’s statement.

In July 2022, Zee received approval from the BSE  and the  National Stock Exchange (NSE) for the  proposed merger. According to reports, both the firms  have been in constant contact with the competition watchdog for more than four to five months for getting its nod.

When the merger plan was announced in September 2021, the two networks said that Sony would invest $1.575 billion and have a 52.93 Per cent  interest in the new firm and Zee the remaining 47.07 per cent.

Last year, in December, SPNI  and ZEEL signed definitive agreements for the merger following the conclusion of an exclusive negotiation period during which both parties conducted mutual due diligence.

When the transaction is completed Sony Pictures Entertainment Inc will indirectly control a majority of 50.86 per cent of the combined firm and the promoters (founders) of Zeel  will hold 3.99 per cent, while the remaining Zeel shareholders would hold a 45.15 per cent stake

Under the terms of the definitive agreements, SPNI, which is an indirect subsidiary of Sony Pictures Entertainment (SPE), will have a cash balance of $1.5 billion (assuming an INR: USD exchange rate of 75:1) at closing, including through infusion by the current shareholders of SPNI and the Zeel promoters, , to enable the combined company to drive sharper content creation across platforms, strengthen its footprint in the rapidly evolving digital ecosystem, bid for media rights in the fast-growing sports landscape and pursue other growth opportunities.

In accordance with the transactions envisioned by a non-compete agreement, SPE, through a subsidiary, will pay a non-compete fee to certain Zeel promoters.. These promoters (founders) will use the non-compete fee to inject primary equity capital into SPNI, giving them the right to purchase shares of SPNI that, on a post-closing basis, would equal about 2.11 per cent of the total shares of the combined company.

Zeel CEO Punit Goenka  will serve as the combined company's managing director and CEO.

Earlier  Invesco along with OFI Global China Fund LLC, which together hold about a 17.9 per cent  stake in ZEEL, had opposed the deal.

In March 2022, Invesco had said it would support the Zee-Sony merger deal and had decided not to pursue the call for an EGM of ZEEL to remove Goenka and two independent directors.

Additionally, Invesco said it would support the Zee and Sony merger, adding that the "deal in its current form has great potential for Zee shareholders," but added that Invesco retains the right to request a new EGM if the merger is not completed as currently proposed.

With 75 TV channels and two video streaming services (ZEE5 and Sony LIV), the merged entity will become India's second-largest entertainment network by revenue. It will also house two film studios -- Zee Studios and Sony Pictures Films India and a digital content studio (Studio NXT).