Sony Terminates Merger Agreement with Zee Entertainment

Culver Max Entertainment, formerly Sony Pictures Networks India (SPNI), has decided to terminate its merger agreements with Zee Entertainment, a move that would have resulted in the formation of a USD 10 billion media entity in India.

Termination Notice

In a statement issued by Sony Group Corporation, it was announced that SPNI, a wholly-owned subsidiary of Sony Group Corporation, has issued a notice terminating the definitive agreements related to the merger of Zee Entertainment Enterprises Ltd (ZEEL) with SPNI. The merger, which was announced on December 22, 2021, has been called off.

Deal Terms

According to the deal terms, the merger was supposed to be completed by December 21, 2023, inclusive of regulatory and other approvals, with a grace period of one month to finalize the transaction. If the merger failed to close within 24 months from the signature date, the parties were required to discuss an extension of the end date.

Unmet Closing Conditions

The termination occurred as the merger did not close by the specified end date, primarily because the closing conditions were not met within the stipulated timeframe. Consequently, Sony sent a termination notice to Zee Entertainment after the expiration of the grace period.

ZEE Entertainment Board’s Response

In response to the termination notice, Zee Entertainment conducted a board meeting to deliberate on the matter. The Board of Directors acknowledged ZEEL’s efforts in line with the Merger Cooperation Agreement. Additionally, they affirmed their commitment to protect the long-term interests of stakeholders, including considering legal action and contesting claims in arbitration proceedings.

Previous Developments

In December of the previous year, ZEEL had requested an extension of the deadline from Culver Max and Bangla Entertainment Pvt Ltd (BEPL). Initially, SPNI had not agreed to the extension request, but later, discussions were initiated on the matter. The proposed merger had already secured regulatory approvals from various authorities and institutions, including the Competition Commission of India (CCI), NSE, BSE, shareholders, creditors, and the National Company Law Tribunal (NCLT) Mumbai bench.

Conclusion

With the termination of the merger agreement, both parties are now evaluating their options moving forward. Despite the setback, the focus remains on safeguarding the interests of stakeholders while navigating through the legal and operational implications of the termination.