The merger of Zee Entertainment Enterprises and Sony Pictures India will take 8-10 months, according to analysts.

In the meanwhile, both standalone companies will function as per their existing strategies. The merger will require approvals from the Competition Commission of India, National Company Law Tribunal, shareholders, the stock exchange and the Ministry of Information and Broadcasting.

“ZEEL, as an entity, will also be delisted for three weeks once the above approvals are in place. A new board of nine members will be formed for the merged entity, with SPNI having more control on nominating the member,” said a report by Elara Capital, based on the call hosted by the top management of Zee including, Managing Director, Promoter and CEO Punit Goenka.

Board members

Zee told analysts during the call that five out of the nine members on the board will be from Sony, one will be Punit Goenka, while the rest will be independent directors. The company will file a joint application to the CCI in a few weeks.

Zee promoter group, Essel Group, will also receive ₹1,100 crore towards non-compete obligations. “SPE (Sony Pictures Entertainment) Mauritius Investments Limited will pay to Essel Mauritius an aggregate USD equivalent to ₹11 billion toward non-compete obligations,” a report from Emkay said.

This will be used by the Essel Group to acquire additional equity of 2.11 per cent so that they have an overall 3.99 per cent share in the overall merged entity.

Zee shareholders will be issued 85 SPNI shares for every 100 ZEEL shares.

Positive outlook

Analysts maintain a positive outlook towards the merger.

“The merger fills in gaps in ZEEL’s portfolio in the sports, comedy and crime genres. The ZEE stock has more than doubled over the past six months, so profit booking is possible. But there can be huge value creation (potentially USD1–2 billion) due to the combined OTT app becoming a must-have for subscribers and a scalable business proposition. All in all, we retain ‘BUY/SO’ with a TP of INR428 as corporate governance concerns would get addressed one way or the other,” Edelweiss said in a report.

“We continue to believe that the merged entity will drive scale in the broadcasting business. And good execution in content/strategy may help it surpass the market leader, Star Disney,” Elara Capital said.