Sony Pictures-ZEEL Merger: Win-win deal for consumers, stakeholders - 10 Key Takeaways

It's one of the biggest developments in the space of linear networks, digital assets, production operations and program libraries. Sony Pictures Networks India Private Limited (SPNI) and Zee
Entertainment Enterprises Ltd. (ZEEL) announced that they have signed definitive agreements to merge ZEEL with and into SPNI. 

It's a major win-win deal, both for consumers and stakeholders. Here are 10 key takeaways:-
 
1- PUNIT GOENKA: MD & CEO OF COMBINED COMPANY

- Punit Goenka will lead the combined company as its Managing Director & CEO. 

- The majority of the board of directors of the combined company will be nominated by the Sony Group and will include the current SPNI Managing Director and CEO, N.P. Singh. 

- On closing, Singh will assume a broader executive position at SPE as Chairman, Sony Pictures India (a division of SPE) reporting to Ravi Ahuja, SPE’s Chairman of Global Television Studios and SPE Corporate Development

2 - LISTING 

After closing, the new combined company will be publicly listed in India.

3- CONTENT, CONSUMER EXPERIENCE

- The combined company will deliver premium content with a robust consumer rxperience across
platforms

4- DIGITAL GROWTH

- Synergies between SPNI & ZEEL will enhance the combined company’s content creation capabilities and drive digital platform growth

5- STAKES

SPNI is an indirect subsidiary of Sony Pictures Entertainment Inc. (SPE).  After the closing, SPE will indirectly hold a majority 50.86% of the combined company, the promoters (founders) of ZEEL will hold 3.99%, and the other ZEEL shareholders will hold a 45.15% stake

6 - BUSINESS SYNERGIES: STRENGTHS

- The combination of ZEEL and SPNI is expected to achieve business synergies and given their relative strengths in scripted, factual and sports programming, respective distribution footprints across India and iconic entertainment brands, the combined company should be well-positioned to meet the growing consumer demand for premium content across entertainment touchpoints and platforms. 

7- HIGHER SHAREHOLDER VALUE

-The seamless blend of rich expertise in content creation, deep consumer insights and success across entertainment genres is expected to drive the combined company’s ability to accrue higher shareholder value. 

8 - SPNI cash balance 

- Under the terms of the definitive agreements, SPNI will have cash balance of USD $1.5 Bn (assuming an INR:USD exchange rate of 75:1) at closing, including through infusion by the
current shareholders of SPNI and the promoters (founders) of ZEEL, to enable the combined company to drive sharper content creation across platforms, strengthen its footprint in the
rapidly evolving digital ecosystem, bid for media rights in the fast-growing sports landscape and pursue other growth opportunities. 

9- NON-COMPETE FEE

Under the transactions contemplated by a non-compete agreement, SPE, through a subsidiary, will pay a non-compete fee to certain promoters (founders) of ZEEL, which will be used by such promoters (founders) to infuse primary equity capital into SPNI, entitling the promoters (founders) of ZEEL to acquire shares of SPNI, which would eventually equal approximately 2.11% of the shares of the combined company on a post-closing basis. 

10- ADVISORS

SPE was advised on this transaction by Morgan Stanley, KPMG Corporate Finance, and Shardul Amarchand Mangaldas & Co. ZEEL was advised by KPMG, JP Morgan, Trilegal and Boston
Consulting Group.

WHO SAID WHAT: TOP MANAGEMENT

Commenting on this development, Punit Goenka, MD & CEO, ZEE Entertainment Enterprises Ltd. said, “It is a significant milestone for all of us, as two leading media & entertainment
companies join hands to drive the next era of entertainment filled with immense opportunities. The combined company will create a comprehensive entertainment business, enabling us to serve our consumers with wider content choices across platforms. I am immensely grateful to the teams at ZEEL, SPE and SPNI for their efforts, that swiftly led us to this point within the stipulated timelines. This merger presents a significant opportunity to jointly take the businesses to the next level and drive substantial growth in the global arena. I look forward to working with the guidance of the esteemed members of the combined company’s board to unlock the potential of this merger, and I wish N.P. Singh all the best in his new role at SPE. His contribution to the Indian media & entertainment industry has been invaluable. I am most certain that our collective wisdom, rich experience and expertise will lead to a more value accretive and exciting company for our shareholders and employees, and a more engaging one for our customers and partners.”

“Today marks an important step in our efforts to bring together some of the strongest leadership teams, content creators, and film libraries in the media business to create extraordinary
entertainment and value for Indian consumers,” said Mr. Ravi Ahuja, SPE’s Chairman of Global Television Studios and SPE Corporate Development. “I want to thank Punit and his team at ZEE and the small army of people at SPE and SPNI who have worked so hard to get us to this point. I especially want to thank N.P. Singh, who presented us with the idea to explore this merger well over a year ago. N.P. has done extraordinary work building SPNI to what it is today, and we look forward to continuing our work with him in his new role after closing.”

MD & CEO, SPNI, N.P. Singh, added, “This merger will create a company that’s best in class and will redefine the contours of the media and entertainment industry. As a representative of
SPE on the Board of the new merged company, it will be my endeavour to provide strategic guidance and support to the company’s operating team in achieving our vision. I am also excited
at the opportunity of being appointed, Chairman, Sony Pictures India, to oversee SPE’s investments and craft a wider footprint for Sony in India.”