ZEE-Sony plan to merge, Punit Goenka proposed as MD & CEO

SPN will hold a 52.93% stake in the merged entity

e4m by exchange4media Staff
Updated: Sep 22, 2021 10:58 AM

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punit goenka

The Board of Directors of ZEE Entertainment Enterprises Limited (ZEEL) present and voting in its board meeting held on 21st September 2021, unanimously provided an in-principle approval for the merger between Sony Pictures Networks India (SPNI) & ZEEL.
The combined entity will have a consolidated topline of about Rs 14,000 crore based on FY21 results and a viewership market share between 25 to 30%.
The two companies will execute a non-binding term sheet for the merger between the two companies and infusion of growth capital by the promoters of Sony India into Sony India as part of the merger. The company and Sony India have agreed to a binding exclusivity for a period of 90 days from the date of the Term sheet.


The Board has evaluated not only on financial parameters, but also on the strategic value which the partner brings to the table. The Board concluded that the merger will be in the best interest of all the shareholders & stakeholders.

The merger is in line with ZEEL's strategy of achieving higher growth and profitability as a leading Media & Entertainment Company across South Asia. The Board has authorized the management of ZEEL to activate the required due diligence
process.

After the merger, SPNI will hold a 52.93% stake in the entity. Zee Shareholders will take the remaining 47.07% stake. The shareholders of SPNI will also infuse growth capital into SPNI as part of the merger such that SPNI has approximately USD1.575 billion at closing, for use in pursuing other growth opportunities.

"Basis the existing estimated equity values of ZEEL and SPNI, the indicative merger ratio would have been 61.25% in favour of ZEEL. However, with the proposed infusion of growth capital into SPNI, the resultant merger ratio is expected to result in 47.07% of the merged entity to be held of all the shareholders and ZEEL. We have unanimously provided an in -principle approval to the proposal and have advised the management to initiate the due diligence process," ZEEL said in a statement.

ZEEL continues to chart a strong growth trajectory and the Board firmly believes that this merger will further benefit ZEEL. The value of the merged entity and the immense synergies drawn between both the conglomerates will not only boost business growth but will also enable shareholders to benefit from its future successes. As per legal and regulatory guidelines, at the required stage, the proposal will be presented to the esteemed shareholders of ZEEL for their approval.

In consideration of the existing promoters of ZEEL and their affiliates agreeing not to compete with the merged company on terms and conditions as may be agreed, promoters of Sony India will transfer such number of shares of MergeCo such that the promoters of the Company will own/hold (when taken together with shares already held/owned) 3.99% of the equity share capital of the merged company, subject to compliance with the applicable laws.

Speaking on the development, ZEEL chairman R. Gopalan said, "The Board of Directors at ZEEL have conducted a strategic review of the merger proposal between SPNI and ZEEL. As a Board that encompasses a blend of highly accomplished professionals having rich expertise across varied sectors, we always keep in mind the best interests of all the shareholders and ZEEL. We have unanimously provided an in -principle approval to the proposal and have advised the management to initiate the due diligence process. ZEEL continues to chart a strong growth trajectory and the Board firmly believes that t his merger will further benefit ZEEL. The value of the merged entity and the immense synergies drawn between both the conglomerates will not only boost business growth, but will also enable shareholders to benefit from its future successes. As per legal and regulatory guidelines, at the required stage, the proposal will be presented to the esteemed shareholders of ZEEL for their approval."

The merger between ZEEL and Sony India would create an entertainment behemoth encompassing TV broadcasting, OTT, and film production. ZEEL owns and operates 49 entertainment channels across 11 languages, while Sony India runs 26 channels in entertainment and sports genres.

The merged entity will be heads and shoulders above its rivals in Hindi GEC genre with channels like Sony Entertainment Television (SET), Zee TV, Sony Sab, &TV, Zee Anmol and Sony Pal. The joint entity will also become a pre-eminent player in Hindi movie genre with brands like Sony Max and Zee Cinema in addition to other specialised channels like &pictures, Sony Max2, Zee Classic, Zee Action, and Zee Bollywood.

Sony-Zee will also have a strong presence in the sports genre and will challenge the dominance of Star Sports, besides tackling new entrants like Viacom18. The merged entity will also have a wide footprint in regional markets like Marathi, Bengali, Tami, Telugu, Malayalam, and Kannada.

The merged entity will also strengthen its presence in the OTT space with two platforms, SonyLIV and ZEE5. It will also consolidate its presence in the film production space.

ZEEL’s consolidated revenues for the year ended 31st March 2021 stood at Rs 7729.9 crore, compared to Rs 8129.9 crore in the previous year, a decline of 4.9%. The company's net profit was up 52% to Rs 800 crore from Rs 526.5 crore.

Sony Pictures Networks India's (SPNI) consolidated revenue for the fiscal ended 31st March 2021 has dropped 4% to Rs 5721.6 crore from Rs 5961.1 crore in FY20. SPNI's consolidated net profit for the fiscal was down 35% to Rs 582.2 crore from Rs 895.5 crore.

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