Top reasons - Why ZEEL-Sony Pictures mega merger is extremely profitable for shareholders, stakeholders

It is the biggest developement of the day as 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 ZEEL-SPNI mega merger deal has been seen as an extremely profitable pact for shareholders, stakeholders.

 

 

- Not only on financial parameters, but the deal ranks very high also on the strategic value which the partner brings to the table

 

- 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.

 

- With a blend of highly accomplished professionals having rich expertise across varied sectors, it has always been kept in mind to serve the best interests of all the shareholders and 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

 

- With this massive corporate development, the merged entity will result into an accelerated growth and a significant opportunity to create tremendous value for all its stakeholders.

 

 

- Vivek Menon, Co-founder of NV Capital, said, "This is a positive and welcome move. After the merger talks of Sony Entertainment with Viacom18 dropping, this consolidation will add synergies to the existing portfolio of both the entities, especially in the verticals of Sports & OTT. Further ZEE would also have access to Sony's international catalogue to exploit and monetise.  The corporate governance overhang of ZEE Entertainment should also fade away with this merger and enhance investor confidence. To add, the combined entity will be in a superior position to compete with Disney more effectively both on the distribution & advertising side. Overall the consolidation looks value accretive."

 

- Santosh Meena, Head of Research, Swastika Investmart Ltd. said, "It was expected that Punit Goenka will not easily lose his positions and Zee may come up with a white knight or other counter offer but the market knew that it will be a win-win situation for Zee shareholders whether there will be any change in management and board or some other player come to buy a majority stake in the company. The recent announcement of a deal with Sony will be a very positive trigger for Zee ltd as it will have a quality promotor and that will ease the issue of corporate governance in the company. Though the deal is a nonbinding agreement so it will take some time for more clarity but this deal will bring a good synergy for both the company to grow their businesses and the combined entity will become the largest player in the industry.  The stock is trading at very attractive valuations and it is one of the strongest and FIIs favorite stocks in the media space and if this deal concludes then we may see a big rerating in the counter. Technically, it is witnessing a breakout of falling channel formation and manages to move above its all-important moving averages where 300 is an immediate and psychological hurdle; above this, it is likely to head towards 350 mark. On the downside, 250 has become a strong support mark."

 

 

-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.