ZEE-Sony merger receives approval from stock exchanges

The proposed merger between Zee Entertainment Enterprises (ZEE) and Culver Max Entertainment, earlier Sony Pictures networks India (SPN), has received approvals from the stock exchanges – the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).
ZEE said in a statement that approvals mark a “firm and positive step” in the overall merger approval process and permits the company to proceed with the next steps in the overall merger process.

The two companies had already filed an application in the Competition Commission of India (CCI) for its permission and will now file for approvals from the National Company Law Tribunal (NCLT) and other regulatory approvals.

ZEE and SPN had signed a definitive agreement to merge the two companies on December 22, last year.

The proposed merger will see ZEE merging into SPN and, after closing, the merged company will be publicly listed in India. Under the terms of the definitive agreements, SPN will have a cash balance of $1.5 billion (assuming an INR to USD ratio of 75:1) at closing, including through an infusion by the current shareholders of SPN and the promoters of ZEE.

As part of a non-compete agreement, SPE will pay Rs 1101.31 crore to ZEE's founder promoters as a non-compete fee, which will be used by the promoters to infuse primary equity capital into SPN, entitling them to acquire an additional 2.11% shares of the merged company.

Post-merger, SPE will hold 50.86% of the merged company, while ZEE promoters will hold 3.99%. Existing shareholders of ZEE will hold a 45.15% equity stake in the merged company.

As per the agreement, ZEE MD & CEO Punit Goenka will lead the merged company as its MD and CEO. The board will have nine directors, of whom the Sony Group will nominate five, while three will be independent.