The news of a big merger deal came out in the sector of entertainment today. Zee Entertainment has announced its merger with Sony Pictures Networks India. That is, now Zee Entertainment will merge with Sony Pictures. Sony will invest $1.57 billion, or about Rs 11,500 crore, and will have a controlling stake of 52.93 percent after the merge of these two, the company said in an exchange filing. At the same time, the shareholders of Zee Limited will hold 47.07 percent. The investment money will be used for development.
The board of Zee Limited has approved the merger. However, Puneet Goenka will continue to be the Managing Director (MD) and Chief Executive Officer (CEO) of the consolidated company. Also, the TV business, digital goods, production operations, and program plan for the two companies will be merged. A non-binding agreement has been signed between the two companies. However, the contract effort will be finalized in the next 90 days. The existing promoter Family G will have complete freedom to increase its stake from 4 percent to 20 percent.
The merger proposal will be presented to the shareholders for their approval. Zee, which has a presence in TV broadcasting and digital media along with brands like Zee TV, is under pressure from top investors for a management reshuffle, including the removal of CEO Puneet Goenka from the board. Zee's board said it has "evaluated not only the financial parameters for the deal but also the strategic value that will accrue from the entry of a new partner."
Today Zee Entertainment's stock is gaining momentum. It opened at the level of 281.20 on the Bombay Stock Exchange. At 10.11 am, it jumped 62.10 points (24.29 percent) to reach the level of 317.75. It had closed at 255.65 in the previous session. Presently the market capitalization of the company is Rs 29972.89 crore.
