Zee Entertainment Denies Talks with Sony to Revive Scrapped Merger : Reports
In a whirlwind of speculation surrounding the fate of Zee Entertainment Enterprises Ltd (ZEEL), the company has vehemently denied engaging in any negotiations to resurrect the abandoned merger deal with Sony Group Corp. This clarification comes amidst a backdrop of uncertainty following reports suggesting renewed talks between the two media giants.
In a whirlwind of speculation surrounding the fate of Zee Entertainment Enterprises Ltd (ZEEL), the company has vehemently denied engaging in any negotiations to resurrect the abandoned merger deal with Sony Group Corp. This clarification comes amidst a backdrop of uncertainty following reports suggesting renewed talks between the two media giants.
In a statement issued on Tuesday, ZEEL asserted, “We would like to clarify that the Company has not been involved in any negotiations or any other event,” firmly dispelling rumors of a potential revival of the scrapped merger agreement. The clarification, made through a stock exchange filing, aimed to address the recent surge in ZEEL shares, which witnessed an 8 per cent increase during the trading session, closing at ₹193 on the BSE and ₹190.40 on the NSE.
Sony Group Corp.’s decision last month to terminate the merger deal had sent shockwaves through the industry. The merger, initially announced over two years ago, encountered insurmountable hurdles primarily revolving around the leadership structure of the combined entity. Zee had nominated its chief executive, Punit Goenka, to lead the conglomerate, but Sony balked at the proposal, citing concerns over an ongoing market regulator probe into Goenka’s financial conduct.
The Securities and Exchange Board of India (SEBI) had levied serious allegations against Goenka and ZEEL’s founder, Subhash Chandra, pertaining to deceptive loan recoveries and siphoning of funds. SEBI’s interim order accused the duo of engaging in misleading practices, orchestrating false entries, and diverting funds through intricate financial maneuvers. These allegations cast a shadow over Goenka’s leadership role within the prospective merged entity, prompting Sony’s apprehensions regarding corporate governance.
The SEBI case, which surfaced in June last year, alleged a systematic scheme involving up to 13 entities as pass-through vehicles, resulting in a substantial erosion of ZEEL’s shareholder wealth. Despite a subsequent relief granted by the Securities Appellate Tribunal in October, nullifying SEBI’s management restrictions on Goenka for eight months, Sony remained wary of the ongoing regulatory scrutiny.
While Goenka received respite from the appellate authority, permitting him to resume executive functions, Sony’s persisting concerns regarding corporate governance integrity continued to thwart any potential reconciliation efforts. The divergence in leadership visions, coupled with the shadow of regulatory scrutiny, posed insurmountable obstacles to the envisaged merger between ZEEL and Sony.
As the saga unfolds, market observers keenly await further developments, pondering the ramifications of regulatory interventions on the strategic trajectories of both ZEEL and Sony in the ever-evolving landscape of the media and entertainment industry.
Sources By Agencies
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