Sony Pictures Networks India Private Limited (SPNI) and Zee Entertainment Enterprises Ltd. (ZEEL) on Wednesday announced that they have signed definitive agreements to merge ZEEL with and into SPNI and combine their linear networks, digital assets, production operations and program libraries.
Under the agreement, SPNI will have a cash balance of $1.5 billion, including through infusion by the current shareholders of SPNI and the promoters of ZEEL, according to a joint press release issued by Zee – Sony.
The deal aims to enable the combined company to drive sharper content creation across platforms, strengthen its footprint in the rapidly evolving digital ecosystem, bid for media rights in the fast-growing sports landscape and pursue other growth opportunities.
The new merged firm will be publicly listed in India. However, the closing of the transaction is subject to regulatory, shareholder, and other approvals.
As part of the deal, ZEEL promoters have agreed to limit the equity that they may own in the merged entity to 20 per cent of its outstanding shares. In addition, Punit Goenka will lead the become the Managing Director and CEO of the new firm.
SPE, through a subsidiary, will pay a non-compete fee to certain ZEEL promoters, which will be used to infuse primary equity capital into SPNI, entitling ZEEL promoters to acquire shares of SPNI, which would eventually equal approximately 2.11 per cent of the shares of the merged company on a post-closing basis.
After the closing, SPE will indirectly hold a majority of 50.86 per cent of the merged firm, ZEEL promoters will hold 3.99 per cent, and the other ZEEL shareholders will hold a 45.15 per cent stake.
Commenting on this development, Punit Goenka, MD and CEO, ZEE Entertainment Enterprises, said, “It is a significant milestone for all of us, as two leading media & entertainment companies join hands to drive the next era of entertainment filled with immense opportunities. The combined company will create a comprehensive entertainment business, enabling us to serve our consumers with wider content choices across platforms.”
“I am immensely grateful to the teams at ZEEL, SPE and SPNI for their efforts, which swiftly led us to this point within the stipulated timelines. This merger presents a significant opportunity to jointly take the businesses to the next level and drive substantial growth in the global arena,” he added.
Ravi Ahuja, SPE’s Chairman of Global Television Studios and SPE Corporate Development, said “today marks an important step in our efforts to bring together some of the strongest leadership teams, content creators, and film libraries in the media business to create extraordinary entertainment and value for Indian consumers.”
Invesco Developing Markets Fund, which along with OFI Global China Fund LLC, together hold about 17.9 per cent stake in ZEEL, had opposed the merger deal.
The two entities have been pressing for an EGM of ZEEL to discuss various issues, including the removal of Goenka and are currently locked in legal battles.