Board of ZEEL principally approves the merger between ZEEL and Sony Pictures Networks India

The Board of Directors of ZEE Entertainment Enterprises Limited (ZEEL), unanimously provided an in-principal approval for the merger between Sony Pictures Networks India (SPNI) & ZEEL. The Board has evaluated not only on financial parameters, but also on the strategic value which the partner brings to the table.

The Board concluded that the merger will be in the best interest of all the shareholders and stakeholders. The merger is in line with ZEEL’s strategy of achieving higher growth and profitability as a leading Media & Entertainment Company across South Asia.

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The Board has authorized the management of ZEEL to activate the required due diligence process. The parent company of SPNI, Sony Pictures Entertainment will hold a majority stake in the merged entity. It will also infuse USD 1.575 billion at closing, for use and pursuing other growth opportunities.

Basis the existing estimated equity values of ZEEL and SPNI, the indicative merger ratio would have been 61.25% in favour of ZEEL.

However, with the above-mentioned infusion of USD 1.575 billion, the resultant merger ratio is expected to be 47.07% held by ZEEL shareholders and the balance 52.93% held by SPNI shareholders.

ZEEL and SPNI have entered into a non-binding term sheet and have agreed to combine both companies’ linear networks, digital assets, production operations and program libraries.

The term sheet provides a period of 90 days to both sides during which ZEEL and SPNI will conduct mutual diligence and enter into a definitive agreement.

The merged entity will be a publicly listed Company in India.

It is an integral part of the proposed merger that Punit Goenka continues to be the Managing Director and CEO of the merged entity.

Further, certain non-compete arrangements will be agreed upon between the promoters of ZEEL and the promoters of SPNI. According to the term sheet, the promoter family is free to increase its shareholding from the current  4% to upto 20%, in the normal course of business.

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Majority of the Board of Directors of the merged entity will be nominated by Sony Group. It is anticipated that a final transaction would be subject to completion of customary due diligence and execution of definitive agreements and required corporate, regulatory and third party approvals, including the votes of ZEEL’s shareholders.

ZEEL’s strong expertise in content creation and its deep consumer connect established over the last 3 decades, coupled with SPNI’s success across entertainment genres (including gaming and sports) will add immense value to the merged entity and its management team, thereby increasing shareholder value multifold.

“The Board of Directors at ZEEL have conducted a strategic review of the merger proposal between SPNI and ZEEL. As a Board that encompasses a blend of highly accomplished professionals having rich expertise across varied sectors, we always keep in mind the best interests of all the shareholders and the Company. We have unanimously provided an in-principal approval to the proposal and have advised the management to initiate the due diligence process. ZEEL continues to chart a strong growth trajectory and the Board firmly believes that this merger will further benefit the Company. The value of the merged entity and the immense synergies drawn between both the conglomerates will not only boost business growth but will also enable shareholders to benefit from its future successes. As per legal and regulatory guidelines, at the required stage, the proposal will be presented to the esteemed shareholders of the Company for their approval," R. Gopalan, Chairman, ZEE Entertainment Enterprises Ltd. said. 

Under the guidance of the Board, the management of ZEEL, ably led by Mr. Punit Goenka, continues to steadily work towards achieving higher profitability in line with its set goals for the future. With this corporate development, the merged entity will result into an accelerated growth and a significant opportunity to create tremendous value for all its stakeholders. 

(Disclaimer: Zee Entertainment is not our sister concern/group company. Though our names sound similar but our company is owned by Zee Media Corporation, which is a different group.)