Tribunal approves $10 bn Sony-Zee merger in major media shake-up

The National Company Law Tribunal (NCLT) on Thursday approved the $10 billion merger between Culver Max Entertainment (Sony) and Zee Entertainment Enterprises Ltd (Zee), setting the stage for a major shake-up in the media sector in India.

Under the deal, which both companies had first announced in December 2021, Sony will hold a 50.86% stake in the joint venture; investors in Zee will hold a 45.15% stake, and Zee’s promoters will own a 3.99% stake after the merger.

The deal had stipulated that Zee managing director and chief executive officer (MD and CEO) Punit Goenka would serve as MD and CEO of the merged entity for five years.

However, on 12 June, market regulator Securities and Exchange Board of India (Sebi) barred Goenka and Essel Group chairman Subhash Chandra from holding managerial or directorial positions in any listed company or its subsidiaries.

The father-son duo are key figures in the Essel Group, a diversified Indian conglomerate. Zee Entertainment is a subsidiary of Essel Group.

In its April-June earnings call, Zee had said that there would be no changes to the clauses on the merger, except the one on Goenka in the wake of the Sebi order.

Goenka reportedly told The Economic Times that the merger would go ahead with or without him being at the helm. 

The new combined company will be publicly listed in India after closing the deal, Sony and Zee had said in the statement announcing the deal.

Sony-Zee will become the biggest broadcaster in India and the second largest video streaming platform after Disney+Hotstar.

Meanwhile, various lenders had raised objections to the merger in the NCLT, seeking settlement of their claims.

The Mumbai bench of NCLT, which pronounced the order on Thursday, rejected the arguments raised by some of Zee’s lenders, including Axis Finance and JC Flowers Asset Reconstruction Co.