Ahead of schedule, the Sony-G merger might fall through because of the CEO crisis
While the regulatory probe into Soni Goenka is ongoing, Zee is certain that its Chief Executive Officer Punit Goenka, who is also the company's founder's son, would head the new firm as per the deal inked in 2021. Considering his appointment, many are leery.
Ahead of schedule, the Sony-G merger might fall through because of the CEO crisis.
As the firms face an impending deadline to break their deadlock, the fate of the proposed merger between Zee Entertainment Enterprises Ltd. and the Indian division of Sony Group Corp. might be known as early as next week, according to individuals familiar with the case. must carry out. Cancel the much anticipated $10 billion media conglomerate.
According to the sources, Sony may notify Zee next week that the merger is scheduled to happen unless the two parties can agree on who would run the combined company and who will complete the deal. who begged not to be identified since the material is confidential, the requests cannot be fulfilled. The sources indicated that because there wouldn't be enough time to wrap up all the loose ends by the statutory deadline of December 21, this may be the deal's death knell.
While the regulatory probe into Soni Goenka is ongoing, Zee is certain that its Chief Executive Officer Punit Goenka, who is also the company's founder's son, would head the new firm as per the deal inked in 2021. Considering his appointment, many are leery. Due to this, the two-year-old merger proposal has been the subject of a protracted legal battle that has already witnessed significant drama and delays.
In response to an email, a Zee official said that the firm was "actively engaged" to ensure that the necessary conditions for the purchase were completed on time, without commenting on the leadership problem. He said that Zee is in contact with Sony "on a regular basis" and has already finished the most of them. Comment queries were not answered by Sony personnel.
The Mumbai-based media company allegedly obtained phony loans in June to finance private financing transactions led by its founder, Subhash Chandra, according to allegations made by market regulator Securities and Exchange Board of India. In an interim decision, SEBI said that Chandra and his son Goenka "abused their position" and embezzled money.
According to the persons, Sony continued to see the continuing inquiry as a potential corporate governance concern even after Goenka received relief from an appeal body against the Sebi ruling, which prohibited him from having an executive or board position in a listed firm. appears as. The deadlock was originally covered by the local daily Mint.
Until one of the partners doesn't even blink, the merger is being pushed to the verge of collapse by the ultimate tug of war—who blinks first? With the Sony-Zee merger, the goal was to become the biggest entertainment conglomerate in India, strong enough to take on both domestic players like Reliance Industries Ltd. and major international players like Netflix Inc. and Amazon.com Inc.
According to the 2021 deal, Goenka's family would own 3.99% of the combined company, while public shareholders will own the remaining 50.86%. According to the individuals, Sony has no intention of extending the deadline of December 21.
Naturally, the planned merger has practically all governmental clearances behind it, and if the parties work out their differences swiftly, it might still be concluded. They may also ask the Indian Company Court to extend the deadline for mergers.
According to a note compared to brokerage firm Motilal Oswal Financial, if the deal closes, it will help expand Sony's media companies in the most populous country in the world, which is home to more than 75 television channels as well as 37% of the global television market—a market share that is higher than Disney-owned Star's 24%. Services Done
Last month, Bloomberg News revealed that the area is already seeing a surge in consolidation, with Reliance—which had previously attempted to acquire Zee—in advanced discussions to acquire the Indian businesses of Walt Disney Co.
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