Media mogul Subhash Chandra's Zee Entertainment has taken legal action, approaching a corporate disputes tribunal and the National Company Law Tribunal (NCLT), seeking Sony's compliance with a $10 billion merger deal. This move comes after Sony's decision to terminate the merger due to disagreements over leadership in the combined entity.
In response to the termination, Zee CEO Punit Goenka, who was under investigation by market regulator Sebi over fraud allegations, had written to Finance Minister Nirmala Sitharaman, blaming Sebi for attempting to hinder the deal with untimely notices related to alleged fund diversion by Zee promoters.
Zee denied breaching the merger deal in a stock exchange filing and contested Sony's claims through arbitration proceedings at the Singapore International Arbitration Centre (SIAC). Simultaneously, Zee approached the Mumbai-bench of the NCLT to enforce the agreed-upon merger, which had received approval in 2023.
Sony's India unit reassured its employees that the company would thrive despite the failed merger. Zee, on the other hand, countered Sony's claims of a $90 million breach of conditions before the SIAC. Zee emphasized that Culver Max and BEPL, the entities set to merge with ZEEL, were defaulting on their obligations, and legal action was initiated to contest their claims.
Zee refuted all allegations of breaching the merger agreement and deemed Sony's termination fee claim as legally untenable. The media entity is exploring all available options, including legal actions, to contest Culver Max and BEPL's claims in arbitration proceedings.
Subhash Chandra raised concerns about Sebi's actions, alleging a prejudiced approach and seeking the Finance Minister's intervention to protect minority shareholders' interests. Chandra referenced a stay order from the Securities Appellate Tribunal (SAT) against Sebi's ban on him and his son Puneet Goenka from holding key positions in any listed entity.
According to the initial merger agreement, Sony intended to invest $1.575 billion in the merged entity, securing a majority stake of 52.93%. The completed merger would have created the largest entertainment network in India, with over 70 TV channels, ZEE5 and Sony LIV streaming services, and two film studios—Zee Studios and Sony Pictures Films India.
In a letter to employees, SPNI Managing Director and CEO N P Singh urged them to focus on ongoing projects, emphasizing the company's potential for growth and the promise of a new phase despite the aborted merger with Zee Entertainment.
(With Agency Inputs)