Clearing the decks for the creation of the country’s largest media company, the National Company Law Tribunal on Thursday approved the merger of Zee Entertainment Enterprises with Culver Max Entertainment (formerly Sony Pictures Networks India). The tribunal’s Mumbai bench also dismissed all objections against the proposed merger.
Following the order, Zee’s share price rallied to gain 20% in intra-day trade and closed up 17.95% at `285.55 on the BSE.
The ruling, pronounced as an oral order, comes a month after the tribunal reserved its verdict after hearing objections from creditors on July 11. A number of creditors, including Axis Finance, JC Flower Asset Reconstruction, IDBI Bank, Imax Corp and IDBI Trusteeship, had raised issues over the merger.
ADVERTISEMENT
This could be the final approval needed for the merger, unless some of the creditors decide to move the National Company Law Appellate Tribunal (NCLAT).
In September 2021, Zee, an Essel Group company promoted by media baron Subhash Chandra, announced plans to merge the firm with Sony Pictures Networks India, a subsidiary of Japan’s Sony Corp. The companies later approached NCLT seeking approvals.
The deal, which has already received approvals from the stock exchanges, Securities and Exchange Board of India, and the Competition Commission of India, would result in creating the country’s largest media and entertainment company with standalone revenues of $2 billion.
The merger, according to analysts, would create a $10-billion media giant, with the combined entity owning over 70 TV channels, two video streaming services (Zee5 and SonyLiv) and two film studios (Zee Studios and Sony Pictures Films India). It would be the country’s largest TV network company with a 26% market share.
ADVERTISEMENT
In an interim order on June 12, Sebi had prohibited Subhash Chandra, chairman of Essel Group, and his son Punit Goenka from assuming directorial or major managerial positions due to alleged misuse of funds from Zee for personal gain. The Securities Appellate Tribunal uheld Sebi’s interim order, imposing a one-year restraint on Zee promoters Chandra and Goenka from holding board positions in publicly listed companies, citing alleged fund diversion. —FE