Zee board gives in-principle approval for merger with Sony Pictures Networks India

The board of directors at Zee Entertainment Enterprises has given its in-principle approval for the merger between Sony Pictures Networks India (SPNI) and Zee Entertainment Enterprises Limited (ZEEL). Punit Goenka will be the Managing Director and CEO of the merged entity. The decision on the merger was taken during the board meeting held on September 21. The board has authorised the management of ZEEL to initiate the required due diligence process.

SPNI shareholders will hold a majority stake in the merged entity. They will also pump in growth capital into SPNI as part of the merger so that SPNI has $1.5 billion at the closing for pursuing other growth opportunities, a regulatory filing stated.

The statement said that on the basis of the existing estimated equity values of ZEEL and SPNI, the merger ratio would have been 61.25 per cent in favour of Zee. However, considering SPNI’s growth capital infusion, ZEEL would hold 47.07 per cent of the merged entity and SPNI would hold 52.93 per cent of the entity.

The deal will see both the companies combining their linear networks, digital assets, production operations and programme libraries. As part of the deal, ZEEL and SPNI will conduct mutual diligence and finalise definitive agreements during an exclusive period of 90 days.

The merged entity will be a publicly listed company in India.

Non-compete arrangements will also be agreed upon between the promoters of ZEEL and SPNI. The promoter family will be able to increase their shareholding from the current 4 per cent to up to 20 per cent, the statement said. Sony Group will decide on the majority of the board of directors of the merged entity.

The final transaction will be subject to customary due diligence and execution of definitive agreements and required corporate, regulatory and third-party approvals, including the votes of ZEEL's shareholders.

ZEEL board concluded that the merger will be in the best interest of all the shareholders and stakeholders. The merger is in line with ZEEL’s strategy of driving growth and profitability across South Asia.

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