NCLT Approves Zee Entertainment-Sony India Merger, Rejects All Objections

Announced in 2021, the merger has faced delays for various reasons including a legal dispute involving Zee's founders and its major shareholder

The verdict paves the way for to create a $10-billion media giant in the country comprising Zee Entertainment Enterprises and Culver Max Entertainment (previously known as Sony Pictures Network India). 

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The National Company Law Tribunal (NCLT) on Thursday gave its approval for the proposed merger of Zee Entertainment Enterprises Ltd with Sony India. Announced in 2021, the merger has faced delays for various reasons including a legal dispute involving Zee's founders and its major shareholder. Additionally, an insolvency case filed against Zee caused further delays, but it was paused in February.

On Thursday, the NCLT dismissed all objections regarding the merger, reported Business Today. The Mumbai bench of the tribunal comprising H V Subba Rao and Madhu Sinha had reserved the judgment after listening to objections from creditors, including Axis Finance, JC Flower Asset Reconstruction Co, IDBI Bank, Imax Corp, and IDBI Trusteeship, the report said. 

The verdict paves the way for to create a $10-billion media giant in the country comprising Zee Entertainment Enterprises and Culver Max Entertainment (previously known as Sony Pictures Network India). 

Prior to seeking approval from the tribunal, both firms had already secured consent from the National Stock Exchange (NSE), Bombay Stock Exchange (BSE), Competition Commission of India (CCI), and Securities and Exchange Board of India (SEBI).

Following the announcement, shares of Zee Entertainment rose 14.98 per cent higher at Rs 278.55 on the National Stok Exchange at 15.00 pm. 

Notably, the Securities and Exchange Board of India (SEBI) issued an interim order on June 12, 2023, prohibiting Subhash Chandra, chairman of Essel Group, and his son Punit Goenka from taking up managerial roles or directorial positions. This was due to allegations of misusing funds from Zee for personal gain. The Securities Appellate Tribunal (SAT) upheld SEBI's order and imposed a one-year restriction on Subhash Chandra and Punit Goenka, preventing them from holding board positions in publicly listed companies. 

In a communication to Zee employees on July 17, Punit Goenka clarified that the challenges he's facing are personal and related to the promoter family. He said that these issues should not be regarded as problems of the company.

As per a PTI report, during Zee's Q1FY24 earnings call, Zee Entertainment CEO Punit Goenka said that his legal situation and the merger were separate issues. He also said that apart from the provision confirming his position as a crucial part of the merged entity, no other alterations were made to the agreement's terms.