New Delhi: Sony Pictures Networks India (SPNI) has decided to drop its legal challenge against Zee Entertainment Enterprises Ltd (ZEEL) over the failed merger deal that would have created a media giant worth $10 billion in India.
According to a report by Moneycontrol, SPNI informed the National Company Law Tribunal (NCLT) on Thursday that it was withdrawing its application seeking the merger of its business with ZEEL. The report quoted sources who said that SPNI did not want to pursue the matter any further and wanted to move on.
The merger talks between SPNI and ZEEL, which began in 2021, collapsed in January 2022 after the two parties could not agree on who would head the combined entity. SPNI, which Japan’s Sony Group Corp owns, had proposed that its CEO NP Singh would be the chief executive of the merged company, while ZEEL, which the Essel Group controls, had insisted that its managing director and CEO Punit Goenka would retain his position.
SPNI’s subsidiaries Culver Max and Bangla Entertainment had also signed a merger agreement with ZEEL in September 2021, subject to certain conditions. However, they terminated the agreement on January 22, 2022, claiming that ZEEL had breached the terms and conditions of the deal. They also demanded a termination fee of $90 million from ZEEL.
ZEEL, on the other hand, accused SPNI of unilaterally walking away from the merger and violating the exclusivity clause of the agreement. ZEEL approached the NCLT and the Singapore International Arbitration Centre (SIAC) to seek legal remedies against SPNI’s termination of the deal.
On January 31, 2022, the NCLT admitted a petition filed by a ZEEL shareholder, who sought the merger of SPNI’s Indian business with ZEEL. The shareholder argued that the merger was in the best interest of ZEEL and its stakeholders and that SPNI had no valid grounds to terminate the deal.
SPNI’s group companies also filed a request with SIAC, asking it to restrain ZEEL from pursuing any legal action against them in the NCLT or any other Indian or international courts until the arbitration proceedings were completed. However, SIAC rejected SPNI’s request and said that it had no authority to stop ZEEL from approaching the NCLT.
The merger saga also took a toll on ZEEL’s reputation and stock price, as the company faced allegations of mismanagement, corporate governance lapses, and financial irregularities. ZEEL’s board recently approved the formation of an independent advisory committee, which will look into the allegations and rumors against the company and take appropriate actions to restore investor confidence.
