As per the scheme of the arrangement, Sony will indirectly hold 50.86 per cent of the combined company
The National Company Law Tribunal has approved the merger of Zee Entertainment and Sony India Merger.
As per the scheme of the arrangement, Sony will indirectly hold 50.86 per cent of the combined company. The founder of Zee will own around four percent and the rest will be with the other shareholders of ZEEL. Moreover, Sony Group will also pay a non-compete fee of Rs 1,100 crore to the Essel Group promoters.
The approval comes nearly two years after the merger was announced in December 2021.
A bench led by Justice Subba Rao while passing the order said, “..All objections against the merger have been rejected.”
The Securities Exchange Board of India, Competition Commission of India and the National Stock Exchange and BSE Ltd had already given their clearances. The approval took time as various financial and operational creditors had moved the NCLT opposing the merger while also filing please to initiate corporate insolvency resolution process against ZEEL.
“The organisation or a corporation as a entity is different from a person. In this case NCLT has given approval for merger between Sony and Zee. Now in the merger there was a condition that Punit Goenka will be MD but that condition was there as long as Punit Goenka was not prohibited by any other law of the country for becoming MD. So this NCLT order on merger is separate and any other proceeding that is going on whether it is by SEBI, RBI or whatever it may be, that will be separate. So as per the NCLT order the two entities can merge and consequences of any future order will be on the merged entity. Merged entity cannot say that NCLT had approved so I will not follow what SEBI says, so the orders are separate,” said J N Gupta, Former ED of SEBI.
Meanwhile Karan Taurani, Senior VP & Research Analyst at Elara Capital said that “This is a big respite that the approval has come in and the bigger respite is it has come in without any kind of conditions. So right from SEBI to the creditors there have been no conditions imposed on merger because that could have led to a delay. So as where things stand today, there is a very high likelihood of the merger going through without the Goenka family because Punit Goenka has also stepped down from the board of Yes Bank. However all in all this looks good and from here on I think going ahead one could start exploring the actual synergies of the business.”
First Published: Aug 10, 2023 2:48 PM IST