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Sony-Zee merger timeline: How leadership dispute ended the $10 bn deal

Sony Group Corp has called off its merger with Zee after nearly two years of negotiating the $10 billion deal, which was set to become India's fourth-largest media house

Incidentally, all three channels belong to the Zee network

Vasudha Mukherjee New Delhi
Sony Group Corp called off its merger with Zee Entertainment Enterprises Ltd on Monday after nearly two years of negotiating the $10 billion deal. This was first reported by Bloomberg, citing leadership disputes that were exacerbated by Indian regulatory authorities. The proposed merger, with the vision of creating India's largest broadcast company, encountered challenges during negotiations, leading to unresolved issues and strained relations between the companies.

Punit Goenka vs N P Singh


Sony and Zee faced disagreements regarding the leadership of the merged entity. Sony advocated for NP Singh, its India managing director and CEO, to assume the chief executive role in the interim, citing concerns related to Punit Goenka, Zee's managing director and chief executive officer. These were exacerbated after the Securities and Exchange Board of India (Sebi) banned Goenka from taking any managerial position while investigating allegations of fund siphoning. Goenka eventually had the ban removed. However, Sony was still hesitant to move forward. Days before the deadline for the merger, Goenka offered to step down but disagreed with N P Singh leading the deal.

Sony-Zee media powerhouse


The proposed merger would have created a 74-channel powerhouse, providing the Japanese group with a sizable market share when consolidation is reshaping the media landscape in India. Sony's holding in the combined entity is expected to be 53 per cent, and the company has committed to investing $1.6 billion to expand its footprint.
 
The merged entity was poised to become India's fourth-largest media company after Google, Meta and Disney-Star, respectively. Zee currently holds a market share of 18 per cent in the Indian entertainment and broadcasting business, while Sony has six per cent.

Lapse of $100 million penalty


The original agreement also included a provision for a $100 million penalty if either party backed out, but this clause became void after the expiration of the December 21 deadline, according to media reports.

Here is a timeline of events leading to the merger's conclusion:

Full timeline of Sony-Zee merger and cancellation

September 21, 2021: Zee Entertainment's board of directors unanimously approved the merger with Sony Pictures Networks India.

December 21, 2021: After a 90-day due diligence period, the board approved the merger, aiming to create a media powerhouse.

February 2022: IndusInd Bank files for insolvency proceedings against Zee Entertainment.

July 29, 2022: Stock exchanges BSE and NSE approve the merger.

October 4, 2022: The Competition Commission of India (CCI) approved the merger with voluntary structural remedies.

December 2022: IDBI Bank moves the National Company Law Tribunal (NCLT) against ZEEL, seeking an insolvency proceeding to recover Rs 149.60 crore in dues.

February 22, 2023: NCLT accepts insolvency proceedings against ZEEL in response to IndusInd Bank's petition.

May 2023: NCLT directs NSE and BSE to reconsider their initial approvals for the merger.

June 12, 2023: The Securities and Exchange Board of India (Sebi) bans Subhash Chandra and Punit Goenka from holding managerial or directorial positions for allegedly siphoning off funds.

August 10, 2023: NCLT gives nod to the merger, dismissing objections from creditors.

August 14, 2023: Sebi announces an eight-month investigation on misappropriation of funds by Punit Goenka and Subhash Chandra. Both are barred from holding key executive and managerial positions.

August 26, 2023: Punit Goenka moves the Securities Appellate Tribunal (SAT), challenging Sebi's confirmatory order.

September 2023:  IDBI Bank and Axis Finance challenge NCLT's approval for the merger in the National Company Law Appellate Tribunal (NCLAT).

October 30, 2023: The SAT quashes Sebi's order restraining Punit Goenka from holding the post of MD and CEO.

November 2023: Sony seeks NP Singh to lead the merged entity instead of Punit Goenka.

December 3, 2023: IDBI Trusteeship lodges an appeal at the NCLAT against Essel Group, a subsidiary of ZEEL.

December 15, 2023: NCLAT issues notice to ZEEL over the petitions filed by IDBI Bank and AXIS Finance.

December 17, 2023: Zee Entertainment seeks an extension of the deadline for the merger.

December 19, 2023: Sony issues a statement, looking forward to hearing ZEE's proposals.

December 20, 2023: ZEEL says it is in talks with Sony about extending the merger deadline.

January 18, 2024: Punit Goenka offers to step down from the role of Chief Executive Officer.

January 22, 2024: Sony officially notifies Zee Entertainment Enterprises Ltd. of the decision to call off the merger.
 

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First Published: Jan 22 2024 | 12:12 PM IST

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