11-Aug-2023
2 mins read
On Thursday, the National Company Law Tribunal’s (NCLT) Mumbai bench greenlit the merger plan between Zee Entertainment Enterprises Ltd (ZEEL) and Sony Pictures Networks India (SPNI). The tribunal also overruled any reservations related to the merger.
The Stock Movement
Post-announcement, Zee Entertainment’s shares took a sharp hike, seeing an impressive 21.6% growth, reaching a 52-week high of Rs 290.70. Despite the initial surge, the stock concluded the day with a 16.18% gain, settling at Rs 281.45 per share on the NSE.
Insider’s Take on The Deal
Abneesh Roy, an authoritative voice from Nuvama Institutional Equities, speaks about the merger optimistically. He emphasizes the potential the stock holds, with a nod to its history and Sony’s significant $1.5 billion input. Roy speculates the stock can potentially return to the Rs 370 levels it once enjoyed.
Shareholders’ Benefit – The Swap Ratio
The merger conditions stipulate that current Zee shareholders will be allocated 85 shares of the newly merged company for every 100 shares they currently hold in ZEEL.
What the Merged Entity Looks Like
A breakdown of the shareholding reveals:
- Public: 45.15%
- Existing Promoters: 1.88%
- ZeeL Promoters (from non-compete fee): 2.11%
- Zee Promoters total in the merged company: 3.99%
- Shares issued to Bangla Entertainment (a part of Sony): 1.38%
- Shares for Sony Pictures Networks India (SPNI): 49.48%
- Sony’s total shareholding: 50.86%
Post-merger, ZEEL’s stock will undergo a delisting and then be relisted under the merged entity following stock exchange protocols.
Judicial Hurdles and Approvals
The merger faced scrutiny at the NCLT, with creditors voicing their concerns. Nevertheless, after due deliberations, the regulatory body approved this game-changing merger. This move paves the way for forming a formidable $10-billion media behemoth.
A Quick Look Back
Announced in 2021, this merger faced numerous delays. Worries escalated when SEBI imposed a ban on Zee Entertainment’s CEO. However, the merger’s future looked brighter in 2022 when Zee and Sony proposed certain concessions, eventually gaining the much-needed antitrust approval.
Conclusively, this merger stands as a testament to the dynamic nature of the media industry. As the landscape continuously evolves, such major shifts ensure that industry giants remain on their toes, always striving for innovation and growth.