ZEE Denies Reports Of Sony Calling Off Merger, Terms It 'Baseless, Factually Incorrect'

Sony Zee Merger: The agreement was signed in 2021

Sony plans to file the termination notice before a January 20 extended deadline for closing the deal, saying some of the conditions necessary for the merger had not been met by ZEE.

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Zee Entertainment Enterprises Ltd (ZEEL) on Tuesday issued a clarification and denied media reports on Zee-Sony merger termination. The company termed the news baseless and factually incorrect. "Zee is committed to the merger with Sony and is continuing to work towards a successful closure of the proposed merger," ZEE said in an exchange filing on Tuesday. The merger agreement was signed in 2021.

According to news reports on Monday, Sony is looking to cancel the deal because of a standoff over whether Zee's Chief Executive Officer (CEO) Punit Goenka, also its founder’s son, would lead the merged entity. The said merger was first announced two years ago in an attempt to build India's largest broadcast corporation. However, Sony no longer wants him as CEO amid a regulatory probe.

Sony plans to file the termination notice before a January 20 extended deadline for closing the deal, saying some of the conditions necessary for the merger had not been met. Goenka has stood his ground in wanting to helm the merged entity, as agreed initially, over prolonged meetings in the past few weeks.

The failure to comply with what are known as conditions precedents (CP) in legalese has added to the simmering discontent between the suitors, who have so far been unable to agree on ZEEL MD Punit Goenka being the CEO of the merged entity until he is cleared of charges that he siphoned off money from the publicly-traded firm to closely held companies owned by his family's Essel Group.

In June, market regulator Securities and Exchange Board of India (SEBI) charged Goenka and Zee Group Chairman Subhash Chandra with misappropriating company funds. However, Goenka's ban on holding board posts in Zee Group entities was lifted by the Securities Appellate Tribunal (SAT) in October.

Shares of ZEEL closed at Rs 256.25 apiece, down 7.64 per cent on Tuesday.