NCLT gives nod to Zee-Sony merger

The Mumbai bench of the National Company Law Tribunal (NCLT) on Thursday dismissed all objections to the merger. It had reserved the order a month ago. After the NCLT order, Zee shares ended 18% higher on Thursday to close at Rs 286 on the BSE
The merger, announced in September 2021, has been hobbled by legal fights. First by Zee’s largest shareholder Invesco, and then by creditors like Indian Performing Right Society, IndusInd Bank and Axis Finance, for defaulting on payments. Later, Sebi’s order banning MD Punit Goenka from holding key managerial positions in listed firms too was a hurdle. Goenka had challenged Sebi’s decision but the Securities and Appellate Tribunal refused to stay the order. It asked Goenka to defend himself before Sebi and directed the regulator to pass a final order, which will be out this month.

The merged entity will become the country’s second largest media and entertainment player in terms of revenue, number of channels and viewership count after Walt Disney. The new entity will also compete with billionaire Mukesh Ambani-owned Viacom and Sun Network.
Under the pact, Sony will hold 53% in the merged entity, while Zee will own the remaining 47%. Shares of Zee will be delisted from the stock exchanges and subsequently, the shares of the merged entity (the name of the combined unit hasn’t been disclosed yet) will be listed on the bourses. Through the merger, Sony will get listed in India without an IPO.
“Zee, having faced legal hurdles in finalising the merger, can now breathe a sigh of relief as the deal progresses. The merger with Sony is expected to benefit various stakeholders, including the companies themselves by enhancing their competitive positions, shareholders through potential increased value, and viewers by potentially offering a broader range of content. The combined strengths may lead to synergies that can foster growth and efficiency in their operations,” said KS Legal & Associates managing partner Sonam Chandwani.
Goenka, who will spearhead the combined entity under the pact, has said that the merger should not be held up whether he is the MD of the new company.
The NCLT will issue a reasoned order on Friday.