23-Jan-2024
2 mins read
Zee Entertainment shares tumbled 10% on Tuesday, January 23 2024 trading session. The major reason seems to be the termination of the Zee – Sony merger deal.
On Monday, January 22, 2024, Sony announced its plan to end the merger of its Indian operations through Culver Max Entertainment with Zee. After stepping back on Monday, Sony further demanded the $90 million termination fee. However, Zee Entertainment rejected the demand and planned legal action against Sony.
Zee Entertainment Comment on Merger Issue
Indian Media company Zee Entertainment said on Exchange Filling, “The company categorically refuses all claims and assertions made by Culver Max and BEPL regarding alleged breaches of the MCA by ZEEL, including their claims for the termination fee, and reserves all its rights in this matter.”
Furthermore, Zee added, “The company is evaluating all available options and basis the guidance received from the Board and will take all necessary steps to safeguard the long-term interests of its stakeholders, including by taking appropriate legal action and contesting Culver Max and BEPL’s claims in the arbitration proceedings.”
CLSA, Citi, MOFSL Revised the Zee Stock Rating
A prominent brokerage firm, CLSA, has revised its recommendation on Zee from “Buy” to “Sell.” This update comes after the termination of the Zee – Sony $10 Billion merger. CLSA commented that Zee’s PE will slump back to 12x levels, seen before the Sony merger announcement in 2021.
Citi has also downgraded the Zee Entertainment shares to “Sell and reduced its price target to Rs 180. The firm has also slashed its Financial year 2024 – 2026 earnings estimate of Zee by 22% – 38%.
Moreover, Motilal Oswal also revised ratings of Zee stock from “Buy” to “Neutral”. Motilal further added that they do not expect a recovery in earnings in the near term. It is unclear what path Zee may take in the coming future, and there needs to be more clarity on the long-term outlook of business.
Zee Entertainment is expected to report its December 2023 quarter earnings on January 23, 2024. It will be interesting to see how stock prices may react after earnings.