Zee told the Indian stock markets that Sony was asking for $90 million in termination fees for allegedly breaking the terms of their merger agreement and by “invoking arbitration” for emergency support. Zee said it doesn’t agree with any of Sony’s claims and will take legal action if necessary.
Sony said in a statement that “closing conditions” for the merger had not been met despite “good faith discussions” with Zee. The companies also said they had not been able to agree on an extension by the date of January 21.
“They are very disappointed with us after more than two years of talks…” It also said, “We are still committed to growing our presence in this exciting and quickly growing market.”
On Monday, neither Sony nor Zee said more about which conditions had not been met. However, the merger was in danger because there was no agreement on who would lead the new business.
Zee wanted CEO Punit Goenka to take over, but Sony said no because he was being investigated by India’s market regulator. On Monday, Zee said that Goenka was “willing to step down for the sake of the merger.”
A person who knew for sure, however, said that Sony did not want to move forward unless Goenka backed out before the merger was finalized, not after the deal was sealed as he had suggested.
“A Message From God”
The Securities and Exchange Board of India banned Goenka from being a member of any listed company last year, saying he was involved in taking money from Zee and giving it to other listed companies in the group.
Goenka rejected the charges. In October, an Indian court lifted the ban on him but told him he would have to help with any investigations by the government.
The executive was in Ayodhya, India, to see the opening of a new Lord Ram temple. He wrote on X that he sees the Sony deal falling through as “a sign from the Lord” and that he will move on by making his company stronger for all of its partners.
Zee is currently dealing with less money coming in from ads and less cash on hand. In the six months ending September 30, its cash on hand dropped from 5.88 billion rupees a year earlier to 2.48 billion rupees.
The Indian company said it had taken a number of steps to make the deal with Sony, which had cost it “one-time and recurring costs.” It will now “continue to evaluate organic and inorganic opportunities for growth.”
Zee has been a well-known name in India for a long time. It has channels in Hindi and other languages that cover news and entertainment. People often call Goenka’s father, Subhash Chandra, the “Father of Indian Television” because he started it in 1992.
Along with Zee, Sony would have had more than 90 stations. Sony also has entertainment channels and a streaming service in India.
“Shareholders will be disappointed that the Zee-Sony merger did not go through. This merger had the potential to significantly change the way the industry works,” said Hetal Dalal, president and chief operating officer of Institutional Investor Advisory Services.
Sony said that the closure would not have a big effect on its plans for the year ending in March because the deal had not been part of its forecast.
Also Read: “sign From the Lord”: Sony Ends the $10 Billion Deal to Join With Zee
The price of Zee shares has dropped about 8% since September 2021, when the merger was first reported.
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