The wait for closure on the merger proposal between Zee Entertainment Enterprises Ltd (ZEEL) and Culver Max Entertainment Private Limited (CMEPL aka Sony Pictures Networks India Pvt Ltd – SPNI) has just got longer. But no one is surprised.
Acting on expected lines, ZEEL has requested SPNI to extend the 21 December cut-off date set by the two media majors to bring their amalgamation into effect when the merger agreement was first announced in December 2021.
The two parties later signed a definitive agreement to merge in December 2022, with ZEEL’s chief executive Punit Goenka leading the combined entity and the majority of the board being Sony nominees, including present SPNI managing director and CEO, NP Singh.
In a disclosure to the Bombay Stock Exchange on Sunday (17 December), ZEEL stated, “Pursuant to Regulation 30 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘LODR Regulations’), we hereby inform you that pursuant to the Merger Cooperation Agreement dated December 22, 2021 entered into amongst the Company, BEPL (Bangla Entertainment Private Limited) and CMEPL, the Company has requested CMEPL and BEPL to extend the Date required to make the Scheme effective, as per the terms of the Merger Cooperation Agreement.”
While the merger has faced various hurdles, the major sticking point has been the ruling by the the Securities and Exchange Board of India (SEBI) in June that Goenka and and his father – Essel group chairman Subhash Chandra – were barred from holding the position of a director or key managerial position in any listed company after they were charged with diverting funds from the company.
However, the Securities Appellate Tribunal (SAT) on October 30 granted relief to Goenka by allowing an appeal by him, thereby setting aside the SEBI order barring him from holding key managerial positions in the company and other firms. The tribunal further directed Goenka to cooperate with the market regulator’s investigation.
There have been credible reports about Sony insisting that Singh should head the merged entity till such time as Goenka was definitively cleared of all charges. If Singh is proposed as the new interim head, Zee shareholders would have to be again approached to ratify his appointment.
As for the merger agreement, the Goenka family will own 3.99 percent shares in the merged entity, whereas Sony will hold 50.86 percent majority shareholding, as per the 2021 agreement. The remaining stake will be in possession of public shareholders.
