ZEE falls 13% amid report Rs 340 crore worth shares change hands in large trade

Shares of Zee Entertainment Enterprises Ltd (ZEE) on Tuesday reportedly saw a large trade, with 1.35 crore shares or 1.4 per cent of the equity worth Rs 340 crore changing hands on the counter amid reports Sony was mulling to call off the proposed merger due to delays. As per a CNBC TV18 report, the large trade took place at an average price of Rs 252 per share.

By 10.17 am, ZEE saw a total volume of 5.29 crore shares and a turnover of Rs 1,333 crore on NSE. The stock tanked 12.66 per cent to hit a low of Rs 242.30, as Bloomberg in a report suggested that the Japan-based Sony Group Corp was planning to call off the merger of its India unit with ZEE, "capping two years of drama and delay in creating a $10 billion media giant."

Also read: No ZEE-Sony merger? ZEE Entertainment shares may see significant downside; further de-rating, says Emkay

The deadline for the ZEE-Sony merger was December 21, 2023. But ZEE on December 17 informed stock exchanges that it had requested Bangla Entertainment (BEPL) and Culver Max Entertainment (formerly known as Sony Pictures Networks India to extend the date required to make the Scheme effective, as per the terms of the merger cooperation agreement.

To this, Sony Pictures Networks India said the notice had triggered an existing contractual provision in the deal that allows for both parties to discuss the possibility of extending the deadline.

"SPNI is required to start those conversations but has not yet agreed to a deadline extension. We look forward to hearing ZEE’s proposals and how they plan to complete the remaining critical closing conditions,” it said.

Later, ZEE informed BSE and NSE that CMEPL and BEPL had decided to enter into good faith negotiations as required under the MCA entered amongst the parties.

Emkay Global said the news, if true, would be setback to both Sony and Zee, having both reported subpar growth over the last year. "We believe the merger not going through will be a lose-lose for both parties, particularly in the face of competition with a much larger entity of Reliance-Disney (if the merger goes through). Both parties will potentially have to recalibrate their strategies from ground zero, which would be a tall order. We believe clarity should emerge in the next couple of weeks regarding a final decision concerning the merger, and if it does not go through, we see significant downside from current levels. Hence, we advise caution in the stock," i said.

Also read: Sony-Zee merger deal evenly poised, it involves a $100-mn breakup fee: Sources