Zee Entertainment Enterprises Ltd’s (ZEE) Board of Directors on Tuesday approved a merger with Sony Pictures Networks India, keeping Punit Goenka as the MD and CEO of the merged entity.
Zee Entertainment Enterprises Ltd’s (ZEE) Board of Directors on Tuesday approved a merger with Sony Pictures Networks India, the company said in a regulatory filing on Wednesday morning. The move paves the way for Punit Goenka to retain his position as MD and CEO of ZEE group, fending off Invesco’s attempt to get him off the Board. “The Board of Directors of ZEE Entertainment Enterprises Ltd present and voting in its board meeting held on 21st September 2021, unanimously provided an in-principle approval for the merger between Sony Pictures Networks India (SPNI) & ZEE,” the filing said.
Further, on Wednesday morning, ZEE’s Board of Directors approved the execution of a nonbinding term sheet with Sony Pictures which allows Punit Goenka to hold his chair for a period of five years. According to the proposed merger, Sony Pictures will hold a majority stake in the company with 52.93% shareholding while ZEE shareholders will hold a 47.07% stake. “Basis the existing estimated equity values of ZEEL and SPNI, the indicative merger ratio would have been 61.25% in favour of ZEE,” the filing with the exchanges said.
Sony Pictures, the subsidiary of Japanese multinational corporation Sony, will infuse growth capital as part of the merger such that Sony Pictures has approximately $1.575 billion at closing. The capital infused will be used for further growth opportunities. “According to the term sheet, the promoter family is free to increase its shareholding from the current – 4% to up to 20%, in a manner that is in accordance with applicable law,” they said. Majority of the Board of Directors of the merged entity will be nominated by Sony Group.
Earlier last week, Invesco and OFI Global, two of the largest shareholders of ZEE, called for an Extraordinary General Meeting (EGM) recommending the removal of Punit Goenka and two others while suggesting the appointment of six independent directors to the board of the company.