Zee Entertainment says NCLT allowed withdrawal of plea for merger implementation with Culver Max, Bangla Entertainment

ZEE Entertainment Enterprises Limited (ZEEL) on Tuesday said that the National Company Law Tribunal (NCLT) allowed it to withdraw its implementation application that sought directions to Sony Group Corp-owned Culver Max Entertainment and Bangla Entertainment to implement the composite scheme of arrangement between the three companies, Reuters reported. 

On January 22, 2024, Sony said it decided to cancel the $10 billion merger deal between its India unit and ZEEL following two years of discussions. The primary issue that caused the cancellation was a deadlock surrounding the leadership structure of the merged entity. In response, ZEEL took action by filing an implementation application subsequent to Culver Max and Bangla Entertainment's termination of the merger agreement on the same day, citing a breach of the merger cooperation agreement (MCA). 

This led to further legal complications as Culver Max and Bangla Entertainment filed their own applications with the National Company Law Tribunal (NCLT) to dispute the validity of ZEEL's application.

ZEEL had filed the implementation application after Culver Max and Bangla Entertainment terminated the merger agreement on January 22 over an alleged breach of the merger cooperation agreement (MCA). Culver Max and Bangla Entertainment had also filed applications in NCLT challenging the validity of ZEEL's application.

On April 16, ZEEL announced its withdrawal of the merger implementation application filed against Sony before the NCLT, Mumbai bench. The Board made this decision after obtaining legal advice. In a statement, Zee stated, “This decision will also enable the Company to pursue growth and evaluate strategic opportunities to generate higher value for all shareholders. The Board remains committed towards reviewing the strategic action-oriented steps taken by the management and providing timely guidance.”

The company said the decision to withdraw the implementation application will enable it to continue to aggressively pursue all its claims against Sony in the ongoing arbitration proceedings at the Singapore International Arbitration Centre (SIAC) and in other forums.

Sony's India entities initiated arbitration at SIAC against ZEEL, seeking $90 million in termination fees for alleged MCA breaches during the merger agreement termination.