The merger between Culver Max Entertainment (Sony Pictures Networks India) and Zee Entertainment Enterprises is expected to be delayed, Japan’s Sony Group said in a statement on Friday.
“Although the transaction was previously expected to close by the end of the first half of the fiscal year ending on March 31, 2024, based on the latest progress, it is currently expected to close in the months ahead,” the company said.
Sony said it continues to assess the impact of the transaction on its consolidated financial result. The proposed $10-billion merger was approved by the National Company Law Tribunal (NCLT) last month.
While Sony said the two companies are continuing with the necessary procedures for the transaction, experts said the delay is due to legal issues involving Zee.
On Wednesday, the Securities Appellate Tribunal reserved its order on an appeal filed by Zee promoter Punit Goenka against an order of the Securities and Exchange Board of India. The regulator has barred Goenka from holding directorships in Zee group companies and in the merged entity with Sony.
Axis Finance last week challenged the NCLT’s approval to the Zee-Sony merger in the National Company Law Appellate Tribunal (NCLAT), the second lender to do so after IDBI Bank.
In a recent note, Karan Taurani, senior vice-president, research, at brokerage Elara Capital, said the Zee-Sony merger could see the light of day by December. “The record date for a merger is usually given one week prior to delisting. However, there could be a marginal delay in filing Closing Precedents of the merged entity. Subsequently, relisting may happen in the second week of December 2023 versus the second week of November,” Taurani said.
After the merger, announced in December 2021, Zee shareholders would get 85 shares of the merged entity for every 100 shares they hold. Zee’s stock will be delisted and relisted as the merged company after the exchange procedure.
On Friday, Zee’s shares closed 4.13% higher than the previous day’s close, at Rs 264.60 apiece.
In its petition at NCLAT, Axis Finance said the issue of Goenka heading the merged entity needs to be first resolved for the NCLT approval to be fair.