On September 22nd Wednesday, 2021, the board of directors of Zee Entertainment Enterprises Ltd. (ZEEL) unanimously decided to approve the merger with Sony Pictures Networks India (SPNI).
“The board has evaluated not only on financial parameters but also on the strategic value which the partner brings to the table. The board concluded that the merger will be in the best interest of all the shareholders and stakeholders,” it said in a statement.
“The merger is in line with ZEEL’s strategy of achieving higher growth and profitability as a leading media and entertainment company across South Asia.”
The management of ZEEL is required to activate the diligence process as authorized under the board.
The majority stake in the merged entity will belong to the shareholders of SPNI. As part of the merger, the shareholders of SPNI will also infuse growth capital into SPNI such that SPNI has about USD1.575 billion at closing, which can be used in pursuing other growth opportunities and furthering the boundaries.
The indicative merger ratio would have been 61.25 percent in favor of ZEEL based on the existing equity values of ZEEL and SPNI.
The resultant merger ratio is expected to result in 47.07 percent of the merged entity to be held by ZEEL shareholders and the balance of 52.93 percent of the merged entity to be held by SPNI shareholders, according to the proposed infusion of growth capital into SPNI.
ZEEL and SPNI have entered into a non-binding term sheet to combine both companies’ linear networks, digital assets, production operations, and program libraries.
The term sheet provides an exclusive period of 90 days during which ZEEL and SPNI will conduct mutual diligence and finalize definitive agreement(s). The merged entity will be emerged and be introduced as a publicly listed company in India.
Punit Goenka will continue to be the Managing Director and CEO of the merged entity, as part of the said transaction. Further, certain non-compete arrangements are yet to be agreed upon after discussion between the promoters of ZEEL and the promoters of SPNI.
According to the term sheet mentioned above, the promoter family has the freedom to increase its shareholding from the current 4 percent to up to 20 percent in a manner that is in accordance with applicable law. The majority of the board of directors of the merged entity will be nominated by Sony Group. Sony Group will hold the right and power to nominate the majority of the board of directors of the merged entity.
ZEEL Chairman R Gopalan said: “As a board that encompasses a blend of highly accomplished professionals having rich expertise across varied sectors, we always keep in mind the best interests of all the shareholders and ZEEL. We have unanimously provided in-principle approval to the proposal and have advised the management to initiate the due diligence process.” (ANI)