ZEEL Board accords in-principle approval for merger with Sony Pictures Network India

Zee Entertainment Enterprises Limited (ZEEL) today announced that its board, in a meeting held yesterday, unanimously approved an in-principle approval for its merger with Sony Pictures Network India (SPNI). ZEEL has evaluated the strategic and financial parameters of the deal, concluding that the union will be in the best interest of all the shareholders and stakeholders.

The board has authorised ZEEL to activate the due diligence process. The merger will be in line with ZEEL’s strategy of achieving higher growth and profitability. SPNI shareholders will hold a majority stake in the merger entity, with SPNI also infusing growth capital into SPNI as part of the merger. SPNI has USD 1.575 billion at closing. The current estimated equity values of ZEEL and SPNI would have resulted in an indicative merger ratio of 61.25% in favour of ZEEL. The proposed infusion of growth capital by SPNI will, however, result in the resultant merger ratio of 47.07% of the merged entity to be held by ZEEL and the rest 52.93% by SPNI in the merger entity.

The duo have signed a non-binding term sheet to combine both companies linear networks, digital assets, production operations, and program libraries. The duo have a 90 days exclusive period to conduct mutual diligence and finalize definitive agreement. The merged entity will be a publicly listed company in India.

Punit Goenka will continue to be the Managing Director and CEO of the merged entity. The duo will also agree upon non-compete arrangements between the promoters of ZEEL and SPNI. The supporters of ZEEL are free to increase their shareholding from 4% to 20% in line with applicable laws as per the term sheet. Sony Group will, however, appoint the majority of the Board of Directors of the merged entity.

The final transaction will be subject to the completion of customary due diligence and execution of definitive agreements and required corporate, regulatory, and third-party approvals, including the votes of ZEEL’s shareholders.

“The Board of Directors at ZEEL have conducted a strategic review of the merger proposal between SPNI and ZEEL. As a Board that encompasses a blend of highly accomplished professionals having rich expertise across varied sectors, we always keep in mind the best interests of all the shareholders and ZEEL. We have unanimously provided in-principle approval to the proposal and have advised the management to initiate the due diligence process.”

R. Gopalan, Chairman, ZEE Entertainment Enterprises Ltd.

ZEEL’s expertise in content creation and its deep customer connect coupled with SPNI’s success across entertainment genres will add significant value to the merged entity and its management team. ZEEL’s board believes that the merger will further benefit ZEEL, with the merged entity drawing immense synergies between both the conglomerates boosting business growth apart from enabling the shareholders to benefit from the future successes. The proposal will be presented to the shareholders of ZEEL for their approval in line with legal and regulatory guidelines.