Sony calls off $10 billion merger deal with Zee as talks fail: Report
Sony's decision comes after the two companies hit an impasse over the leadership question for the merged entity
Japanese entertainment giant Sony Group has called off a proposed $10 billion media merger deal with Zee Entertainment Enterprises (Zee) that was to lead to the emergence of a global media conglomerate.
Sony sent a termination letter to Zee on Monday conveying its decision to call off the deal, ending a protracted two-year acquisition process, Bloomberg News reported.
Unmet conditions
In the letter, expected to be disclosed to the exchange on Monday (January 22), Sony cited unmet conditions necessary for the merger as the reason for terminating the merger with Zee, the report said.
Sony's decision comes after an extended impasse between the two companies, primarily revolving around the leadership question for the merged entity.
Punit Goenka
The disagreement was over whether Punit Goenka, the Zee Chief Executive Officer will lead the amalgamated company.
Sony is said to be against Goenka helming the company due to an ongoing investigation into his conduct by market regulator Securities and Exchange Board of India (SEBI).
No consensus
The termination notice came after the end of a 30-day grace period over the weekend during which the two parties failed to reach a consensus on the deadline set in late December.
Earlier this month, reports surfaced suggesting Sony's intention to call off the merger due to the leadership dispute. The merger was originally announced more than two years ago.
SEBI action
In June, SEBI accused the Mumbai-based media house of fabricating the recovery of loans to conceal private financing deals by its founder, Subhash Chandra.
SEBI's interim order stated that Chandra and his son, Goenka, "abused their position" and diverted funds. Goenka obtained relief from an appellate authority against the SEBI order, which barred him from holding an executive or director position in a listed company.
The collapsed deal, which had received almost all regulatory approvals, would have created an big entertainment house capable of taking on the likes of Netflix, Amazon. But now Zee faces financial vulnerability and investor angst.
