Merger with Sony will depend on nod from ZEEL’s shareholders
The coming together of ZEEL and Sony will depend on the nod from public shareholders of ZEEL, including the largest shareholder Invesco which is opposed to the union
Sony Pictures Networks India Private Limited (SPNI) and Zee Entertainment Enterprises Ltd. (ZEEL) on Tuesday announced that they have signed definitive agreements to merge. While the agreements follow the conclusion of an exclusive negotiation period during which ZEEL and SPNI conducted mutual due diligence, the eventual merger will depend on the nod from the public shareholders of Zee, including the largest shareholder Invesco which is vehemently opposed to the union.
Zee needs to get at least 75 per cent votes in terms of its shareholding for the merger, which will not be easy with Invesco holding 18 per cent shares. Public shareholders hold around 96 per cent of Zee, while the promoters hold around 3.99 per cent, according to a media report that quotes data from the stock exchanges.
ZEEL has been embroiled in a long battle with Invesco which had earlier sought the removal of managing director and CEO Punit Goenka, and the appointment of six independent directors.
Under the terms of the definitive agreements, SPNI will have cash balance of USD $1.5 Bn (assuming an INR:USD exchange rate of 75:1) at closing, including through infusion by the current shareholders of SPNI and the promoters (founders) of ZEEL, 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.
SPNI is an indirect subsidiary of Sony Pictures Entertainment Inc. (SPE). Under the transactions contemplated by a non-compete agreement, SPE, through a subsidiary, will pay a non-compete fee to certain promoters (founders) of ZEEL, which will be used by such promoters (founders) to infuse primary equity capital into SPNI, entitling the promoters (founders) of ZEEL to acquire shares of SPNI, which would eventually equal approximately 2.11% of the shares of the combined company on a post-closing basis. After the closing, SPE will indirectly hold a majority 50.86% of the combined company, the promoters (founders) of ZEEL will hold 3.99%, and the other ZEEL shareholders will hold a 45.15% stake.
Punit Goenka will lead the combined company as its Managing Director & CEO. The majority of the board of directors of the combined company will be nominated by the Sony Group and will include the current SPNI Managing Director and CEO, N.P. Singh. On closing, Singh will assume a broader executive position at SPE as Chairman, Sony Pictures India (a division of SPE) reporting to Ravi Ahuja, SPE’s Chairman of Global Television Studios and SPE Corporate Development.
