ZEE-Sony merger talks back on track? ZEE engages with Sony in last-ditch attempt, says report

Zee Entertainment Enterprises Ltd (ZEEL) is re-engaging with Sony Group Corp in a last-ditch attempt to save the $10-billion mega merger that was officially terminated on January 22, a report by ET citing sources said. To recall, the ZEE stock had seen downward revisions in target prices post the terminated of merger deal by Sony. In fact, ZEE shares are down 37.32 per cent in 2024 so far despite recovering some 15 per cent in the last one month.

CEO Punit Goenka had earlier in the ZEE's recent analyst call suggested that the termination was reviewed by his board and appropriate steps were taken in consultation with the legal experts, that were in the best interest of all shareholders and stakeholders. ZEE even approached the National Company Law Tribunal (NCLT) to seek directions on the implementation of the scheme, he suggested.

"I certainly wanted the merger to be implemented. In line with this aspiration, we even took several steps towards divestment or closure of profitable businesses in the domestic and international markets. I personally offered several proposals and solutions to Sony, to address their demands, but unfortunately, they remained unaccepted. Since the matter is sub-judice, I would not like to say more and let the law take its own course," Goenka suggested.

Analysts tracking ZEE said the potential reasons for the deal termination was a drastic change in industry dynamics with a likely deal between Viacom and Disney Star and also a gap in decision-making in Sony’s US and Japan offices. They expected the termination to result in a legal tussle between the two media majors. Emkay Global in fact the termination could spur shareholder activism against the ZEE management.

"It is unclear what path ZEE may take going ahead and there is limited clarity on the long-term outlook of the business," Motilal Oswal said. ZEE would now draw other suitors for other potential deals, said one brokerage after the deal termination.

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