Shruti Sneha, Pune
In an unexpected turn of events, Sony Group Corporation of Japan announced on Monday (January 22) that the planned merger between its Indian subsidiary, now Culver Max Entertainment Ltd (CME), and Zee Entertainment Enterprises Ltd (ZEEL), has been halted.
Sony Corporation has formally terminated the previously announced $10 billion merger, citing delays and unsuccessful negotiations. The definitive agreements, signed on December 22, 2021, were abandoned, and Sony is reportedly demanding $90 million in termination fees from Zee, according to The Mint. Punit Goenka, Zee’s MD and CEO, expressed differing views on the combined entity’s leadership, complicating already difficult negotiations.
Despite over two years of discussions, the merger’s closing conditions were not met by the January 21 deadline. Sony expressed its disappointment in a statement to the Tokyo Stock Exchange, emphasizing its determination to expand its presence in the dynamic Indian market.
Punit Goenka, who had previously faced regulatory challenges, received a reprieve from the Securities Appellate Tribunal (SAT) on October 30, 2023. However, regulatory investigations into alleged fund diversion continue.
Experts believe Sony’s concerns about regulatory issues, particularly corporate governance policies, contributed to the deal’s failure. The company had reportedly been advocating for NP Singh, its India MD and CEO, to take the top position, which Goenka opposed.
Originally scheduled for completion on December 21 of the previous year, Zee requested a deadline extension on December 20 that was set to expire on January 20. The 30-day grace period, which was part of the merger agreement starting in December 2021, allowed for discussions about extending the merger’s end date.
The definitive agreements included a thirty-day discussion period during which the parties were expected to negotiate in good faith for an extension. If an agreement was not reached, either party could terminate it by giving written notice. With the end date approaching and the closing conditions unmet, SPNI (now CME) notified ZEEL on January 22, 2024, officially terminating the agreements.
As of November 9, 2023, Sony had included the merger’s effects in its integrated financial results forecast for the fiscal year ending March 31, 2024. The company, however, stated that the termination of the merger agreements is not expected to have a material impact on its consolidated financial results.