Amid the escalating row between news and entertainment giant Zee Entertainment Enterprises Ltd (ZEEL) and Japanese entertainment giant Sony Group, the ZEE board in its meeting today decided to move the National Company Law Tribunal (NCLT) in Mumbai and seek its intervention Implementation of the merger to be applied for.
ZEE says it has also taken “appropriate legal action” to challenge the claims of Sony's Indian company Culver Max Pvt Ltd (formerly known as Sony Pictures Networks India) and Bangla Entertainment Pvt Ltd (BEPL) in “arbitration proceedings” before the Singapore International Arbitration Centre (SIAC). ZEE has also issued a response to Culver Max and BEPL, specifically denying any breach of its obligations under the Merger Cooperation Agreement (MCA) and reiterating that it has complied with all its obligations in “good faith”.
“The company has denied that Culver Max and BEPL have the right to terminate the MCA and the claim for termination fee is legally untenable and without any basis. The company alleged that Culver Max and BEPL are failing in their obligations to implement and implement the plan approved by the Hon'ble National Company Law Tribunal. The company has requested Culver Max and BEPL to immediately withdraw the notice and confirm that they will comply with their obligations to implement and implement the plan of merger approved by the Hon'ble National Company Law Tribunal. The company has reserved all rights in this regard,” ZEE said in a stock exchange filing.
Also Read: Zee-Sony's $10 billion merger deal falls through after two years of talks
ZEE shares closed up 6.7% at ₹166.35 on the BSE today, after plunging 30% on Tuesday to hit a low as Sony's withdrawal from the $10 billion merger deal sparked a sell-off due to stock downgrade by several brokers.
Sony ended two years of merger negotiations with ZEE by officially sending a termination letter on the $10 billion mega-merger deal on Monday. The inability to fulfill the merger agreement was cited as the main reason for terminating the much-touted deal. “While we have had good faith discussions to extend the end date of the Merger Collaboration Agreement, we have been unable to agree on an extension to January 21,” the company said.
After the contract was terminated, Sony also demanded a $90,000,000 fee from ZEE for “alleged violations” of the agreement by resorting to arbitration and seeking injunctive relief.
Also Read: ZEE hits lower after Sony deal collapse and analyst downgrade
In response, ZEE said it was considering all “legal options”. The Punit Goenka-led company also refuted “all allegations made by Culver Max and BEPL regarding the alleged violations,” including its claims for “termination fee.”
ZEE said the efforts and steps taken by it are in accordance with the merger agreement. “ZEEL engaged in several consultations and good faith negotiations with Culver Max and BEPL to consider an extension of the timeline for completing the merger, which did not materialize.”
The company also said that Punit Goenka, managing director and CEO of ZEEL, “agreed” to step down in the interest of the merger. Goenka, in his response to the development, said he considered it a “sign from the Lord”. “As I arrived in Ayodhya early this morning on the auspicious occasion of Pran Pratishtha, I received news that the deal I had imagined and worked towards for two years had fallen through despite my best and honest efforts. I believe that.” Be a sign from the Lord. I am committed to moving forward positively and working towards strengthening Bharat's game-changing M&E enterprise for all its stakeholders,” he wrote on microblogging platform X.
In December 2021, the $10 billion deal was announced that could have created the largest entertainment network in the country. However, ZEE faced several hurdles and delays due to ongoing litigation with capital markets regulator SEBI.
Also Read: ZEE weighs 'legal options' as Sony pulls out of $10 billion deal
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