Zee signs merger agreement with Sony to create India's second largest entertainment network

New Delhi | Jagran Business Desk: Sony Pictures Networks India (SPN) and Zee Entertainment Enterprises Ltd (ZEEL) on Wednesday (December 22) announced that they have signed definitive agreements to merge their companies to create India's second-largest entertainment network. With this, the linear networks, digital assets, production operations, and program libraries of both the entertainment networks will be combined.

However, Sony will hold a majority stake in the merged company with 50.86 per cent stake while Zee’s current holding firm Essel will own 3.99 per cent shares, according to an exchange filing from Zee Wednesday. The latter will have an option to increase the stake up to 20 per cent from the market. The remaining 45.15 percent stake will be held by public shareholders as part of the definitive agreement.

Punit Goenka, son of founder Subhash Chandra, has been appointed as the chief executive officer of the newly created entity by the board.

The merger comes at the backdrop of a complicated boardroom and courtroom feud between Zee’s founders and its largest shareholder.

The new combined company will be publicly listed in India after the existing entities are closed. However, the closing is subject to certain customary closing conditions such as regulatory, shareholder, and third party approvals.

Further, as per the agreement, Sony will have a cash balance of $1.5 bn at closing, including the infusion by the current shareholders of SPNI and the promoters (founders) of ZEE. As per the agreement, promoters will not have any pre-emptive or other rights to acquire equity in the merged company from the Sony Group, the merged company, or any other party.

The merger of the two companies is said to help the new entity in driving sharper content creation across platforms, strengthen its footprint in the digital ecosystem, bid for media rights in the sports landscape and pursue other growth opportunities.

“It is a significant milestone for all of us, as two leading media and entertainment companies join hands to drive the next era of entertainment filled with immense opportunities,” said Goenka. “The combined company will create a comprehensive entertainment business, enabling us to serve our consumers with wider content choices across platforms.”