Zee Entertainment signs merger deal with Sony Pictures India

In a significant development, two major players in the media & entertainment world, Zee Entertainment Enterprises Limited (ZEEL) and Sony Pictures Networks India (SPNI) have signed a merger deal. This announcement was made by ZEEL in a regulatory filing to the stock exchange on September 22.

According to the statement by ZEEL, its board of directors has evaluated the merger not only on financial parameters, but also weighed the strategic value which Sony brings to the table and concluded that the merger will be in the best interest of all the shareholders and stakeholders, said media reports.

This high-profile merger is in sync with ZEEL’s strategy of achieving higher growth and profitability as a leading media & entertainment company across South Asia.

In its filing statement to the stock exchange, Zee said, “The shareholders of SPNI will hold a majority stake in the merged entity. The shareholders of SPNI will also infuse growth capital into SPNI as part of the merger such that SPNI has approximately $1.575 billion at closing for use in pursuing other growth opportunities,” the statement added.

According to the statement filed in the stock exchange, ZEEL shareholders will hold a stake of 47.07 percent, while SPNI shareholders will hold the majority stake of 52.93 percent in the merged company. Zeel and SPNI have entered into a non-binding term sheet to combine both companies’ linear networks, digital assets, production operations and programme libraties, the statement added.

While Punit Goenka will continue to stay as the CEO and managing director of the merged company, majority of the board of directors will be nominated by the Sony group. Both the media companies have agreed to a binding exclusivity of 90 days, during which the definitive agreements will be finalised. The merged entity will be a publicly listed company in India, said media reports.

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”ZEEL continues to chart a strong growth trajectory and the Board firmly believes that this merger will further benefit ZEEL,” said ZEEL’s Chairman R. Gopalan. He added that 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.

According to a Business Standard report ZEEL’s strong expertise in content creation and its deep consumer connect established over the last three decades are expected to complement SPNI’s success in different entertainment genres (including gaming and sports). This synergy will add significant value to the merged entity and its management team, thereby increasing shareholder value multifold.

ZEEL’s shares surged by 14.98 percent to ₹293.95 after the announcement of the merger deal. At 11:15 am, Zee Entertainment Enterprises was trading at ₹304, up by 19 percent,  with a volume of 0.89 lakh shares on the BSE.