ZEE Stock Tanks 15 Per Cent After Sony Calls Off $10-Billion Merger

Sony-ZEE Merger: On Monday, Sony group officially called off the merger with Zee Entertainment Enterprises Ltd

Stock of Zee Entertainment Enterprises Ltd (ZEEL) plunged 15 per cent in the morning trade on Tuesday (January 23) following Sony Pictures scrapped its $10-billion merger with the Indian media giant. At 11.15 am, shares of ZEEL were trading at Rs 197.00 apiece, down 14.99 per cent on the BSE.

On Monday, Sony group officially called off the merger with Zee Entertainment Enterprises Ltd. The Japanese group officially notified Zee Entertainment Enterprises about its plans, ending a two-year acquisition saga, news agency Bloomberg reported.

Sony Group sent a termination letter to Zee early on Monday and is expected to disclose it to the exchange later, citing people privy to the development, Bloomberg said. The Japanese company cited conditions of the merger agreement not being met by ZEE as the reason for the termination. Sony and ZEE spokespersons didn’t not immediately respond to Bloomberg request for comment.

Sony cited delays in closing the deal by the end date and lapses in meeting closing conditions of the agreement as reasons for calling off the merger. The firm is also seeking a termination fee of $90 million on account of alleged breaches of the Merger Co-operation Agreement (MCA).

Zee Entertainment has denied Sony's claim of breach of the MCA terms, including the demand for the termination fee.

Meanwhile, ZEE spent Rs 366.59 crore on compliances till September 2023 for its now-failed merger with Sony. The company had spent Rs 176.20 crore in the financial year that ended in March 2023. Besides, it spent Rs 190.39 crore in the first six months of the current fiscal, according to a regulatory filing by the Subhash Chandra family-promoted media entity.

UBS Securities said the cancellation of the merger is a negative development for Zee, anticipating its implied value per share to drop 20 percent from the current Rs 190.