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Zee shares slump 30% after failed Sony India merger: Biggest fall in five years
Zee shares: Cancellation of $10 billion merger with Sony Group's India unit causes Zee Entertainment Enterprises Ltd. shares to plummet.
Zee Entertainment Enterprises Ltd. shares plunged as much as 30 per cent after the cancellation of a planned $10 billion merger with Sony Group's India unit.
The shares slumped as much as 30 per cent on Bombay Stock Exchange, the most since January 2019, the worst performance among members of the S&P BSE 500 Index. Zee traded at 23 times its one-year forward earnings before Tuesday’s fall, versus 17 times in September 2021 just before the company announced it had agreed to merge with a Sony Group entity, data compiled by Bloomberg show.
Why did Sony call off its India unit merger with Zee?
Sony Group Corp. on Monday formally communicated to Zee Entertainment Enterprises Ltd. its decision to cancel the merger with its India unit.
Sony, in a statement, said, “The Merger did not close by the End Date as, among other things, the closing conditions to the Merger were not satisfied by then. Sony Pictures Networks India Private Ltd (SPNI) has been engaged in discussions in good faith to extend the End Date but the Discussion Period has expired without an agreement upon an extension of the End Date. As a result, on January 22, 2024, SPNI issued a notice to ZEEL terminating the definitive agreements."
IN DETAIL- No deal: Sony sends termination letter to Zee over India merger
Zee to move court
Zee Entertainment is planning to take legal action against Sony Group after the Japanese company ended a $10 billion merger in India, it said in a regulatory filing on Monday.
“The Board would like to assure its stakeholders that the Company will take all the necessary actions, in the best interest of all stakeholders, including by taking appropriate legal action and contesting Culver Max and BEPL’s claims in the arbitration proceedings. The Board has complete faith in the highly experienced senior management of the Company and will continue to guide the team,” said. R. Gopalan, chairperson, Zee.
IN DETAIL- ‘Punit Goenka was agreeable to step down’: Zee plans legal action against Sony
The statement further added that Punit Goenka, MD & CEO of Zee, was “agreeable to stepping down in the interest of the merger”.
