Zee Entertainment denies reports of 10 Billion USD merger termination

Zee Entertainment Enterprises has vehemently denied media reports suggesting that Sony Group is calling off the anticipated mega 10 billion USD merger with the company. This denial comes after Bloomberg’s report hinted at a potential cancellation of the deal, citing a conflict over the leadership of the merged entity.

In a regulatory filing on January 9, Zee Entertainment stated, “The company is committed to the merger with Sony and is continuing to work towards a successful closure of the proposed merger.” The company further dismissed the reports as “baseless and factually incorrect,” emphasising its adherence to obligations under the SEBI Regulations, 2015. Zee Entertainment assured stakeholders that it will continue to make necessary disclosures in accordance with the regulatory framework.

The controversy surfaced when Bloomberg reported that the Sony Group was considering cancelling the deal due to an unresolved conflict regarding the leadership of the merged entity. The reported dispute revolves around whether Zee Entertainment’s Chief Executive Officer, Punit Goenka, should assume a leading role in the merged company.

Market reaction to the news was swift, with Zee Entertainment’s shares experiencing a sharp decline of 10 per cent to Rs 249 per share during the opening hours on January 9. However, by around 1:40 pm, the stock had recovered from its lows, trading nearly 6 per cent down at Rs 262.10 apiece on the Bombay Stock Exchange (BSE).

This development adds a new layer of complexity to the ongoing saga surrounding Zee Entertainment. In August 2023, the Securities and Exchange Board of India (SEBI) banned both Subhash Chandra and Punit Goenka, preventing them from holding key managerial positions at Zee Entertainment. This action was part of an investigation that was expected to span eight months.

However, the Securities Appellate Tribunal (SAT) overturned SEBI’s ban, leading to Punit Goenka’s reinstatement as the Managing Director and Chief Executive Officer of Zee Entertainment on October 30, 2023. The overturning of the ban was a significant development, allowing Goenka to resume his leadership role at the company.