Upate: As per reports coming in, Zee will take legal action against Sony for canceling the merger.
Earlier..
Sony Group Corporation has formally notified Zee Entertainment Enterprises Limited (ZEEL) to terminate their proposed US$10 billion merger deal after expiration of agreed discussion period to extend closing timeline.
With their definitive agreements specifying an end date of 24 months for deal completion, Sony stated that closing conditions remained unmet by the deadline of December 2022.
Though both companies engaged in talks through January 2023 to further extend closure timeline in good faith, the 30-day additional window post original deadline also passed without consensus.
Failure to Agree on Leadership Structure
As per reports, the primary deal-breaker was failure to align on future leadership especially regarding ZEEL CEO Punit Goenka’s role. Sony remained unwilling to have him lead the merged entity citing an ongoing probe into alleged funds diversion by ZEEL under Goenka.
After over two years of negotiations and multiple discussions between senior leadership, Sony expressed that absence of agreement over such a key aspect led to irreconcilable differences scuppering the ambitious joint venture.
Back to Drawing Board
“It’s over. There is absolutely no meeting of minds anymore regarding this proposed merger,” a key insider aware of developments told Mint earlier.
For Zee, it means exploring new partnerships and growth avenues as a standalone entity under current management. Sony also returns to base as it looks to chart fresh India growth strategy minus Zee’s broad TV and digital footprint.
The unexpected development throws the spotlight on regulating authorities to expedite investigation into allegations over fiduciary violations that purportedly influenced Sony’s rigid stance against Goenka heading the merged company.
