'Withdraw termination': Zee moves NCLT, SIAC days after Sony calls off merger deal

Zee Entertainment Enterprises Ltd on Wednesday moved National Company Law Tribunal, Mumbai and Singapore International Arbitration Centre days after Sony terminated a $10-billion merger deal.

Zee denied Sony's claims that it breached its obligations under the deal and has started legal action to contest the claims in arbitration proceedings before the Singapore International Arbitration Centre, it said. The company has also approached the National Company Law Tribunal seeking directions to implement the merger, Zee added.

"The Company approached the Hon’ble National Company Law Tribunal, Mumbai bench inter alia seeking directions to implement the merger scheme. The Company initiated appropriate legal action to contest Culver Max and BEPL’s claims in the arbitration proceedings before Singapore International Arbitration Centre
(SIAC)," said Zee in a stock exchange filing.

News of the merger's termination sent Zee's stock tumbling nearly 34% on Tuesday as investors worried the company would fail to thrive amid increasing competition.

The stock recouped some gains on Wednesday, closing 6.8% higher ahead of its filing to exchanges.

"The company has complied with all its obligations in good faith," Zee said in a stock exchange filing.

"The Company has denied that Culver Max and BEPL are entitled to terminate the MCA and the claim for termination fee is legally untenable and has no basis whatsoever. The Company asserted that Culver Max and BEPL are in default of their obligations to give effect to and implement the Scheme, sanctioned by the Hon’ble National Company Law Tribunal," added Zee.

Sony Group Corp on Monday said it is calling off a merger of its India unit with Zee Entertainment, following a stalemate over who will lead the merged entity.

The entertainment giant sent a termination notice to Zee on the deal, which was announced more than two years back, and is seeking $90 million as break-up fees for violating the terms of the merger pact and “invoking arbitration”.

A standoff over leadership is said to be the reason for the deal being called off. Sony had resisted demand by Zee chief executive Punit Goenka, who was investigated by market regulator SEBI over fraud allegations, to stay on after the merger.

The deal was seen as crucial for both companies for survival in the world’s fastest-growing large economy.

The deal would have created an entertainment conglomerate with more than 70 Indian TV channels, popular Bollywood studios and an extensive film library to take on global powerhouses Netflix and Amazon.