“ZEEL Pulls Out of NCLT Merger Application with Sony”
Zee Entertainment Enterprises Ltd (ZEEL) has officially withdrawn its application for a merger with Sony Group Corp’s India unit from the National Company Law Tribunal (NCLT). This decision comes after Sony called off the USD 10 billion merger in January, marking a significant turn of events in the media industry.
Zee Entertainment Enterprises Ltd (ZEEL) has officially withdrawn its application for a merger with Sony Group Corp’s India unit from the National Company Law Tribunal (NCLT). This decision comes after Sony called off the USD 10 billion merger in January, marking a significant turn of events in the media industry.
In a statement released on Tuesday, ZEEL cited legal advice as the basis for withdrawing the implementation application from NCLT. The company emphasized that this move would allow it to focus on growth strategies and explore strategic opportunities to enhance shareholder value. ZEEL’s Board stated its commitment to reviewing management’s strategic actions and providing timely guidance to stakeholders.
The decision to withdraw from the NCLT application also enables ZEEL to intensify its pursuit of claims against Sony in ongoing arbitration proceedings at the Singapore International Arbitration Centre (SIAC) and other forums. This legal maneuver follows a series of setbacks in the proposed merger, including regulatory approvals and disagreements over leadership roles.
Initially, the merger agreement stipulated that Punit Goenka, CEO of Zee Entertainment, would lead the combined entity. However, conflicts arose between the parties, exacerbated by an investigation launched by India’s market regulator, the Securities and Exchange Board of India (SEBI), into Goenka’s conduct.
Sony’s decision to withdraw from the merger in January was accompanied by a request for a termination fee of $90 million, citing alleged breaches by Zee Entertainment. These developments underscore the complexities and challenges faced in large-scale corporate mergers, particularly in the media sector.
Recent financial data from ZEEL reveals additional pressures on the company. Advertising revenues dipped by 3% year-on-year to 29.48 billion rupees in the nine months leading up to December 31. Cash reserves also declined to 2.48 billion rupees in the six months ended September 30, down from 5.88 billion rupees in the previous year.
Moreover, ZEEL announced earlier this month its decision to reduce its workforce by 15% as part of cost-cutting measures amid ongoing financial challenges.
The withdrawal from the NCLT application marks a pivotal moment for ZEEL, prompting a renewed focus on strategic initiatives and legal proceedings while navigating the evolving landscape of the media industry.
Sources By Agencies
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