'A sign from the Lord': Zee's Punit Goenka's social media post from Ayodhya as Sony terminates $10-bn deal

Zee Sony merger: Hours after Japan's Sony Group announced the termination of $10-billion merger deal with Zee the latter's MD Punit Goenka, who was present at the Ram Mandir Pran Prathishta ceremony in Ayodhya, said he will "resolve to move ahead positively and work towards strengthening India's top media company".

Zee hinted at taking legal action after Sony issued arbitration notices against Zee Entertainment, demanding the cancellation of the merger agreement. Sony stated that it is seeking a termination fee of $90 million from Zee Entertainment, claiming that the company has violated the terms of the agreement.

Zee, on the other hand, refuted all claims made by Sony, asserting that it has not breached the terms of the merger agreement.

Taking to social media platform X, Goenka said: "As I arrived at Ayodhya early this morning for the auspicious occasion of Pran Pratishtha, I received a message that the deal that I have spent 2 years envisioning and working towards had fallen through, despite my best and most honest efforts. I believe this to be a sign from the Lord. I resolve to move ahead positively and work towards strengthening Bharat’s pioneering M&E Company, for all its stakeholders. Jai Shri Ram."

The merger, which was announced in 2021, faced difficulties regarding the management of the merged company. These challenges were further intensified by the investigation conducted by the Securities and Exchange Board of India (SEBI) against Goenka.

In a statement, Sony said: “Culver Max Entertainment (CME) today issued notice to Zee Entertainment Enterprises Ltd. (ZEEL) terminating the agreement dated December 22, 2021, to merge ZEEL and CME. Although we engaged in good faith discussions to extend the end date under the merger cooperation agreement, we were unable to agree upon an extension by the January 21 deadline. After more than two years of negotiations, we are extremely disappointed that closing conditions to the merger were not satisfied by the end date.

"We remain committed to growing our presence in this vibrant and fast-growing market and delivering world-class entertainment to Indian audiences," Sony stated.

Earlier, Zee had denied cracks in the deal process. Last week, Zee had said it was committed to the merger and was working to close the deal through “good faith negotiations”. It was seeking to discuss an extension to a Jan. 20 deadline to close the deal.

In reply, Zee said it will take legal action against Japan-based Sony Group. In a stock filing, Zee said: "The company categorically refutes all claims and assertions made by Culver Max and BEPL regarding alleged breaches of the MCA by ZEEL, including their claims for the termination fee, and reserves all its rights in this matter," Zee said in a stock exchange filing.

"The company is evaluating all available options and basis the guidance received from the Board and 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," Zee said.

Zee noted that its board of directors at their January 22 meeting said that all steps were taken by Zee to implement the merger scheme. The company said it held several talks with Culver Max and BEPL to consider an extension of the merger completion timeline, but it did not materialise.

The company statement noted: "Punit Goenka, MD & CEO of ZEEL, was agreeable to step down in the interest of the merger and proposals in this regard were discussed, including for appointment of a director on the Board of the merged company, protections for conduct of pending investigations and legal proceeedings in the best interest of ZEEL’s directors and shareholders and the consequent modifications to the scheme to incorporate the same."

Also read: Zee-Sony merger is off and opens up a multitude of options