Sony Officially Withdraws Zee Merger Agreement From NCLT: Report

Although the court filings formally conclude the protracted saga, it's probable that legal disputes will persist

Sony Group has reportedly officially withdrawn its agreement to merge its India operations with Zee Entertainment Enterprises Limited (ZEEL) from a local company court. This action marks the conclusive step in abandoning a two-year-old plan aimed at forming a $10 billion media giant. The Japanese entertainment company submitted several filings to India’s National Company Law Tribunal  (NCLT) on Thursday to withdraw from the merger agreement with ZEEL, according to a Bloomberg report.

Although the court filings formally conclude the protracted saga, marked by delays, leadership disputes for the merged entity, and regulatory scrutiny of Zee's founders, it's probable that legal disputes will persist. 

Sony issued a termination notice to Zee on January 22, citing failure to meet merger agreement conditions and requesting $90 million in break-up fees. Zee, however, "categorically" denied any breach of the pact announced in December 2021.

ZEEL announced on January 24 that it has filed cases with the NCLT and the Singapore International Arbitration Centre (SIAC) in response to Sony Pictures Network India's termination of the merger deal. Additionally, the company stated that it had filed an application with the Mumbai bench of the NCLT, requesting guidance on implementing the merger scheme.

Sony Group entities had petitioned SIAC to bar ZEEL from pursuing legal recourse from the NCLT or any other Indian or international courts until the arbitration proceedings concluded. However, SIAC's emergency arbitrator rejected the Sony group's request for interim relief, asserting it lacked jurisdiction to prohibit Zee from approaching the NCLT.

The broken deal between the two firms has increased the vulnerability of both companies, especially as their competitors expand. Reliance Industries Ltd. and Walt Disney Co. revealed their merger of India media operations on Wednesday, forming an $8.5 billion powerhouse, which will become the largest broadcasting and digital company in the world's most populous market.

According to the report, Sony will reassess its strategy in the country following Disney's integration of its India media business into a joint venture with Reliance.