Zee-Sony merger: NCLAT sets aside NCLT order to NSE, BSE to reassess deal

Zee-Sony merger: A two-member bench of the National Company Law Appellate Tribunal (NCLAT) on Friday turned down the National Company Law Tribunal (NCLT) order to bourses NSE and BSE to review their approval of the merger between Zee and Sony.

On Thursday, the appellate tribunal directed the counsel appearing for Zee Entertainment Enterprise Ltd. (ZEEL) to remove defects in the plea and direct it to list the matter the next day.

Earlier, the NCLT had directed NSE and BSE to reconsider their prior approvals for the merger of ZEEL and Culver Max Entertainment (earlier known as Sony Pictures Networks India).

ZEEL had challenged the NCLT's order, and said that it was not given a fair opportunity to present its case. It questioned the tribunal's jurisdiction over matters such as non-compete fees.

The merger of the Puneet Goenka-led Zee Entertainment Enterprises with Sony’s India arm, Sony Pictures Networks India, was announced in 2021. After many hurdles and clashes with shareholders, the merger got the go-ahead from the Competition Commission of India (CCI) in 2022. It has also received a nod from the stock exchanges.

Under the terms of the arrangement, Sony will hold a 50.86 per cent stake in the merged entity. The promoters of Zee will hold 3.99 per cent and other Zee shareholders will hold a 45.15 per cent stake in the combined company.

After the merger, the new entity, which will be headed by Goenka, will be the largest entertainment network in India, with over 70 TV channels, two video streaming service platforms -- ZEE5 and Sony LIV, and two film studios -- Zee Studios and Sony Pictures Films India).

Zee's proposed merger with Sony has faced opposition from lenders, including IDBI Bank, Axis Finance and JC Flower ARC.

In April, Bloomberg reported that Zee Entertainment is trying to hold settlement talks with its creditors to repay debts in a bid to remove all hurdles before completing the merger with the Sony Group that would create a $10 billion media giant.

In March this year, the company repaid dues of IndusInd Bank Ltd., which was one of its creditors. Following this, the lender said it will withdraw its objections against the merger, Zee said in a filing.

The multilingual TV network had reportedly offered IDBI Bank to repay a loan of about Rs 149 crore but in tranches.

In March this year, the company repaid dues of IndusInd Bank Ltd., which was one of its creditors. Following which, the lender said it will withdraw its objections against the merger, Zee said in a filing.

Zee’s founders have been in separate discussions with Axis Bank Ltd and JC Flowers & Co.’s asset reconstruction unit to settle dues of Rs 400 million, as per reports.

Shares of ZEEL saw a significant rise in prices. Around 12.50 PM, the shares surged 7 per cent and were trading at Rs 190.85.

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