ZEE moves NCLT over Sony calling off merger
Zee has denied any breach of its obligations under the MCA and has called upon Sony to immediately withdraw the termination
Zee Entertainment Enterprises Ltd (ZEEL) has moved the National Company Law Tribunal Mumbai and Singapore International Arbitration Centre against Sony’s decision to call off the $10-bn deal merger deal. Also, the company has called upon Culver Max Entertainment Ltd (formerly known as Sony Pictures Network India) and Bangla Entertainment Ltd (BEPL) to immediately withdraw the termination of the deal and confirm that they will perform their obligations to give effect to and implement the Merger Scheme, sanctioned by the National Company Law Tribunal.
Informing the BSE about the move, ZEEl said, “Pursuant to Regulation 30 read with Schedule III of the SEBI Listing Regulations, we wish to inform that, basis the authorization of the Board of Directors of the Company, the Company has undertaken the following actions:
1. The Company issued a reply to Culver Max and BEPL inter alia specifically denying any breach of its obligations under the MCA (Merger Cooperation Agreement) and reiterated that the Company has complied with all its obligations in good faith. The Company has denied that Culver Max and BEPL are entitled to terminate the MCA and the claim for termination fee is legally untenable and has no basis whatsoever. The Company asserted that Culver Max and BEPL are in default of their obligations to give effect to and implement the Scheme, sanctioned by the Hon’ble National Company Law Tribunal.
2. The Company has called upon Culver Max and BEPL to immediately withdraw the termination and confirm that they will perform their obligations to give effect to and implement the Merger Scheme, sanctioned by the Hon’ble National Company Law Tribunal. The Company has reserved all its rights in this regard. The Company approached the Hon’ble National Company Law Tribunal, Mumbai bench inter alia seeking directions to implement the merger scheme.
3. The Company initiated appropriate legal action to contest Culver Max and BEPL’s claims in the arbitration proceedings before Singapore International Arbitration Centre (SIAC)”
In its filing, ZEEL has categorically refuted all claims and assertions made by Culver Max and BEPL regarding alleged breaches of the MCA by the company, including their claims for the termination fee, and reserves all its rights in this matter.
The company said it is evaluating all available options and, based on the Board's guidance, will take all necessary steps to safeguard the long-term interests of its stakeholders, including by taking appropriate legal action and contesting Culver Max and BEPL’s claims in the arbitration proceedings.
ZEEL stated that on January 22, 2024, Culver Max and BEPL issued a communication to terminate the merger Cooperation Agreement (MCA) and seek a termination fee due to alleged breaches of the MCA's terms. They also sought arbitration and emergency interim reliefs against the company.
Meanwhile, sources close to ZEE told e4m, that Sony never gave any formal or informal proposal to ZEEL Board for finalizing the merger up to the last day. Sony did not even bring up the issue of Punit Goenka’s board membership issue to the board, they said.
“Sony was involved in second-track negotiations with the promoters to make Punit Goenka step down. Sony had offered to make Punit Goenka an advisor to the board of the merged entity with 1/10th remuneration of his current package,” the sources claimed.
“Punit Goenka was ready to step down on conditions that he be given full access to the records with regards to documents and reply the company gave to SEBI relating to the ongoing investigations. But Sony did not agree to this,” the sources said.
Punit Goenka wanted a ZEEL director to remain on the board of Sony instead of him and wanted the merged entity to retain few competent people in to maintain continuity and quality of human resource, the sources added.
Sony was negotiating with ZEEL on conditions precedent for the merger but it did not bring up any such condition that could not be fulfilled, they said.
Also, Sony did not come to ZEEL board with any formal or informal proposal before terminating the deal. Even if a formal or informal proposal would have come the board would have examined and if necessary, they would have gone to shareholders with it,” they shared.
The ZEEL board felt Sony changed their strategy from merger to that of acquisition, the sources said.
