Zee shareholders seek transparency on Sony's merger exit
What's the story
Subhash Chandra, chairman of Zee, has alleged that Sony intentionally backed out of the merger deal to portray his company as vulnerable. Chandra's allegation comes at a time when a group of Zee's public shareholders have asked for detailed information and transparency about the termination of the merger agreement with Sony. Ever since the collapse of the deal, Zee's shares have fallen by over 40%.
Lack of transparency
Sony-Zee deal: Investors question opacity in details
Shareholders are questioning why Zee's board did not provide an accurate representation of its negotiations with Sony. Despite reports suggesting strained relations and a possible failure to extend the merger deadline, Zee had insisted that discussions were on track. On January 24, Zee approached the National Company Law Tribunal (NCLT) and Singapore International Arbitration Centre (SIAC) against Sony Pictures, seeking directions to implement the merger scheme.
Investors suffer losses
Shareholders suffered losses as Zee didin't inform of deal deadlocks
The proposed merger, which would have created a $10 billion media entity, was canceled by Sony on January 22. Shareholders have suffered significant losses as Zee was not transparent in providing the true picture of the deal. The situation has left many wondering about the actual nature of the negotiations and the reasons behind the termination of the merger agreement.
More control
Promoter family to raise stakes in Zee
Chandra, the Zee chairperson, told the Economic Times that the promoter family is working toward acquiring an additional 5% stake and will eventually hold 26% of the shares in the company. Chandra also stated that he has approached his younger son Amit Goenka to invest in Zee. He also admitted that market regulator Securities and Exchange Board of India (SEBI) has summoned him to explain the issues that led to the collapse of the deal.
Bottlenecks
Why did the Sony-Zee deal fail
Zee's MD and CEO Punit Goenka's leadership became a dealbreaker in the Zee-Sony merger. Sony expressed discomfort with ongoing investigations concerning him, while Zee's offer for Goenka to step down as CEO but retain a board seat wasn't enough to bridge the gap. Sony wanted Goenka to step down, give up board seat, and have NP Singh, Sony's current CEO for India, lead the merged entity. This was not acceptable to Zee and in the end, no agreement was reached.