Zee Entertainment (NS:ZEE) witnessed an 8% decline in its shares on Tuesday amidst reports suggesting that Sony is contemplating scrapping the proposed merger. Currently trading at Rs 254, Zee Entertainment shares have experienced an 8.3% dip on BSE.
Media outlets indicate that Sony India is nearing a decision to abandon the merger with Zee Entertainment. It is speculated that Sony might issue a termination notice by January 20. The key point of contention now revolves around determining the leadership of the merged entity, as per these reports.
If this breakup materializes, it could pose a setback for both Sony and Zee, given their reported below-par growth over the past year, warns a report by Emkay Global Financial Services. Having received all the necessary regulatory approvals, the failure of this merger is perceived as a lose-lose situation for both entities, especially in light of the competitive landscape with the potential merger of Reliance-Disney. If the proposed merger with Reliance-Disney materializes, both Sony and Zee might need to reassess their strategies from the ground up, a challenging task as outlined in the report.
Regarding Zee Enterprises, the report states, "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." Investors are advised to exercise caution, anticipating further developments in the coming weeks that could impact the stock significantly.
(With Agency Inputs)
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