Executives from Zee and Sony have met several times over the last few days in a last-ditch effort to cobble a deal that would lead to a merger between the two companies in India.

According to sources close to the negotiations, both sides realise the deal is important for them in the changing media landscape. “All approvals are in place, there is no regulatory issue, and the merger is a win-win for both parties. The only thing that needs to be sorted out is Punit Goenka’s future in the company, for which various options are being considered,” said a source without disclosing the details of the options that are on the table.

Talks to continue

Tokyo-based media outlet Nikkei Asia reported on Wednesday that the Sony Group is continuing talks to merge its India subsidiary with Zee Entertainment Enterprises. Talks are set to go on till January 20th, the final day before the grace period to complete the merger ends.

Meetings between the two firms have been ongoing since December 20th, which was the planned date by which the merger needed to be completed. A key bone of contention for Sony is the fact that it cannot get behind Punit Goenka as the MD and CEO of the merged firm, as he is yet to be cleared of charges of siphoning money from Zee to companies associated with his family’s Essel Group.

Law firms Trilegal and Amarchanda Mangaldas are representing Zee and Sony, respectively. Srinivas Balasubramanian, Senior partner and national head of the corporate finance division of KPMG, is brokering the deal, according to sources.

“Official statements are indicating that conversations are ongoing. The merger would be mutually beneficial to both firms, given the nature of the market at present. In all likelihood, the merger will happen,” said Karan Taurani from Elara Capita.

The exact contours of the deal that could potentially go through are still in flux. On one hand, Goenka is adamant about staying on as the executive head of the merged firm, but Sony is more inclined to have him part of the firm in an advisory capacity. Goenka could broker a higher payout in the form of a non-compete fee or get a higher stake in the merged firm. Sources, however, said that no such offer has been made by Sony so far.

“It will be tragic if the merger does not go through. It will be a lose-lose situation for both Sony and Zee, as they need this merger at a time when competitive intensity has increased in the media industry. If the merger does not go through, Zee’s stock price could fall significantly,” said Shriram Subramanian, founder and MD of InGovern Research Services.

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