Zee Entertainment Enterprises had sought $90 million (Rs 748.5 crore) as termination fees for the failed merger with Sony Corporation’s media and entertainment affiliates in India.
In a statement to the stock exchanges, ZEE stated that by issuing a termination letter dated May 23, Culver Max Entertainment Private Limited (aka Sony Pictures Networks India) and Bangla Entertainment Pvt Ltd (BEPL) had breached the existing merger cooperation agreement and has sought a termination fee from Culver Max and BEPL in accordance with the provisions of said MCA. The matter is currently under litigation.
“Culver Max and BEPL have failed to comply with their obligations under the merger cooperation agreement (MCA). Therefore, the Company has terminated the MCA and called upon Culver Max and BEPL to pay the termination fee i.e. the aggregate amount equal to $90,000,000, in accordance with the MCA,” the company said in its filing to the exchanges on May 23.
In a letter dated May 23, 2024, ZEE officially notified Culver Max and BEPL about the termination of the MCA. Alongside the termination, ZEE invoked the agreement’s provisions to seek a termination fee.
Earlier this week, ZEE declared that it has incurred Rs 432 crore ($52m) in merger-related costs during 2023-24 and 2022-23 on account of the failed merger. As per the filings, the firm’s merger-related costs were Rs 256 crore in 2023-24 and Rs 176 crore in the prior fiscal.
A little over two years after announcing their proposed merger, Sony declared on January 22 that the deal had been terminated, accusing ZEE of failing to meet the closing conditions despite extending the closing period by a month. The MCA was executed on December 22, 2021 and had received all the key regulatory clearances from the stock exchanges, the Competition Commission of India and the National Company Law Tribunal.
Soon after the deal was terminated, Sony had sought $90m in termination fees from ZEE for alleged violations of the merger agreement. ZEE initiated legal proceedings to contest the claim.
