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Zee-Sony Pictures Networks India merger: Details of the big bang entertainment deal explained
Sony has signed a non-binding merger deal with Zee Entertainment. ET’s Gaurav Laghate takes you through the deal’s contours, which will create an entertainment behemoth with 75 channels and how company promoter Subhash Chandra proved once again that he is a master at the art of making a deal when the chips are down. Watch
- 53% of the merged entity would be owned by Sony India shareholders and the rest by Zee’s holders. Sony shareholders will inject capital into its unit so that it will have about $1.58 billion of funds at closing. Majority of the board will be nominated by Sony.
- The deal provides an exclusive negotiation period of 90 days during which Zee and Sony will conduct mutual diligence and negotiate definitive, binding agreements.
- Zee Chief Executive Officer Punit Goenka, whose removal shareholders have sought, will lead the entity.
- The merged entity will own 75 TV channels, two video streaming services (ZEE5 and Sony LIV), two film studios (Zee Studios and Sony Pictures Films India) and a digital content studio (Studio NXT), making it the largest entertainment network in India, bigger than Star & Disney India.
- As per the last available financial details, they will also have over Rs 16,000 crore in revenues and an employee count of over 4,000. However, there will be a lot of overlap, which could mean the rationalisation of resources and consolidation of a few TV channels.
- The promoters of the two companies will also sign certain non-compete arrangements as part of the transaction.
- The promoter family of ZEE is free to increase its shareholding from the current 3.99% to up to 20%, in a manner that is in accordance with applicable law.
- The final transaction will be subject to completion of customary due diligence and execution of definitive agreements and required corporate, regulatory and third-party approvals, including the votes of ZEE’s shareholders.
The announcement adds another twist to the fate of the beleagured Zee after Invesco Developing Markets Fund and OFI Global China Fund LLC, which together hold about 17.9% stake in the network, sought an extraordinary general meeting of shareholders last week to oust Goenka along with two board members.
The removal was seen as a move to end the sway of founder Subhash Chandra’s family over the company founded in 1992, and which was once Rupert Murdoch’s Indian partner. The two board members resigned with immediate effect.
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