Zee And Sony Settle Merger Disputes, Terminate $10 Billion Deal

Zee Entertainment Enterprises Ltd. (ZEEL) has announced a significant development in its ongoing legal battle with Sony Pictures Networks India (SPNI). The two media giants have entered into an agreement to settle all disputes regarding the termination of their proposed $10 billion merger. This settlement has had an immediate impact on the stock market, with Zee’s share price soaring by as much as 15% on August 27.

Stock Market Reaction

Following the announcement, Zee’s stock surged to an intraday high of ₹154.9, before stabilizing at ₹147.7. Despite cooling off, the stock remained up by approximately 10% from the previous close, reflecting investor optimism over the resolution of the disputes.

Settlement Details

According to a statement released by Zee Entertainment, both companies have mutually agreed to withdraw all claims against each other. This decision brings an end to the ongoing arbitration at the Singapore International Arbitration Centre and related legal proceedings in the National Company Law Tribunal (NCLT) and other legal forums.

Background of the Merger Termination

The merger between Zee and Sony was initially announced in December 2021, with a proposed value of $10 billion. However, earlier this year, Sony decided to terminate the merger, citing breaches of the merger agreement by Zee Entertainment. As a result, Sony sought a $90 million termination fee.

In response, Zee had also sought a termination fee of ₹750 crore ($90 million) from Sony’s entity, Bangla Entertainment Pvt. Ltd. (BEPL). Zee claimed that Sony and BEPL had failed to fulfill their obligations under the Merger Cooperation Agreement (MCA), leading to the termination of the agreement.

Conclusion

With this settlement, both companies have now resolved their differences, allowing them to move forward without the burden of ongoing legal disputes. This resolution marks the end of a significant chapter in the proposed merger between two of India’s largest media conglomerates.