Zee drags Sony to NCLT to complete merger

Zee Entertainment Enterprises Ltd (ZEEL) has moved the National Company Law Tribunal (NCLT) and Singapore International Arbitration Centre (SIAC) against Sony Pictures Network India’s termination of the merger deal.

The company has approached the Mumbai-bench of NCLT, “seeking directions to implement the merger scheme”, the Punit Goenka-led media major said in a regulatory filing.

Termination notice

After issuing a termination notice on Zee, Sony also demanded a $90 million termination fee from Zee from breaching terms of MCA.

On that regard Zee said, “The Company issued a reply to Culver Max and BEPL inter alia specifically denying any breach of its obligations under the MCA and reiterated that the Company has complied with all its obligations in good faith.”

 Claiming that Sony’s right to claim termination fee is legally untenable and has no basis whatsoever, Zee said that Sony is in default of their obligations to give effect to and implement the Scheme, sanctioned by the NCLT. In the exchange filing Zee has called upon Sony to immediately withdraw the termination and confirm that they will perform their obligations to give effect to and implement the Merger Scheme. 

The proposed amalgamation, which would have created a $10 billion media entity, was terminated by Sony on January 22.

Merger agreement

As per the merger agreement, inked on December 22, 2021, Zee and Sony Pictures Networks India (now known as Culver Max), along with Bangla Entertainment Pvt Ltd, were to be merged into a single entity within 24 months.

After the deadline lapsed last month, both the companies entered into a month-long negotiation, which reportedly failed to yield results due to a lack of consensus over who would be heading the merged entity. While Zee pushed for Goenka, its MD and CEO, to be appointed as the head of the merged company, Sony wanted its CEO N P Singh to preside at its helm.

“Although we engaged in good faith discussions to extend the end date under the merger cooperation agreement, we were unable to agree upon an extension by the January 21 deadline. After more than two years of negotiations, we are extremely disappointed that closing conditions to the merger were not satisfied by the end date,” Sony said in its statement issued on January 22.