Shares of Zee Entertainment Enterprises Ltd. were locked in a revised lower circuit of 30%, falling to their lowest in over three years, on Tuesday as brokerages downgraded the stock after Sony Group Corp.’s Indian unit terminated the merger agreement.
Shares of ZEE nosedived 30.50 percent on January, breaking a series of extended lower circuits through the day and hitting its 52-week low of Rs 152.50.
Following the development, at least 6 institutional shareholders cumulatively owning over 30% of ZEE are reportedly believed to be planning to approach the board and stock market regulator SEBI in the next one week, to call an extra ordinary general meeting (EGM) of ZEE and seek the removal of company MD and CEO Punit Goenka as well as its chairman R Gopalan.
On Monday, after two years of negotiations, Sony finally terminated its merger deal with ZEE, stating the two could not agree on closing terms. The entertainment giant is also seeking $90 million as break-up fees for violating the terms of the merger pact and “invoking arbitration”.
In a stock exchange filing on on Monday, ZEE on its part denied all claims made by Sony and said it is exploring its own legal remedies. “ZEE has displayed utmost commitment towards the merger by undertaking several permanent and irreversible steps, resulting in one time and recurring costs for ZEE,” it stated.
As per the original agreement, the Sony-ZEE merger was to be completed by December 21, 2023.
IF the merger had gone through, it would have created a $10 billion media and entertainment conglomerate.
The developments come at a time when there are ongoing merger discussions between Reliance India Ltd (RIL) and The Walt Disney Company. As per reports, a non-binding agreement to potentially merge Disney Star and Viacom 18 has already been signed, with both companies currently in the due diligence phase.
