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Zee Entertainment Enterprises Ltd. and Sony Pictures Network Ltd. have signed a non-binding term sheet for the merger.

Our calculation implies the valuation for merged entity at $11.1 billion (or Rs 816 billion) on post-money basis.

These is basis $1.575 billion infusion by Sony for additional 14% stake (39% to 53%) in merged entity.

Zee Entertainment gets valued at ~Rs 400/share for its 47% stake in merged entity on post-money basis viz. Rs 816 billion, 47% equals to Rs 384 billion/960 million current o/s shares of the company (viz. ~27/22.5 times) FY23/24E earnings per share.

On pre-money basis, the company is valued at Rs 447/share.

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