Sony is planning to call off the merger of its India unit with Zee Entertainment Enterprises, said people familiar with the matter, capping two years of drama and delay in creating a $10 billion (approx. Rs. 83,040 crore) media company.
The Sony Group is looking to cancel the deal due to a standoff over whether Zee’s Chief Executive Officer Punit Goenka, also its founder’s son, would lead the merge entity, as per people said, asking not to be name as the information is not public.
As the agreement sign in 2021 was that Punit Goenka would lead the new company, Sony no longer wants him as CEO amid a regulatory probe, as per source.
Sony plans to file the termination notice before a 20th January 2024 extend deadline for closing the deal, saying some of the conditions necessary for the merger had not met, one of the source said.
Punit Goenka has stood his ground in wanting to helm the merge entity, as agreed initially, over prolonge meetings in the past few weeks, as per another source.
Discussions are still ongoing between the two sides and a resolution can still emerge before the deadline.
Representatives for Sony and Zee did not immediately respond to an email and phone calls seeking comment.
The Sony-Zee combine aim to create a $10 billion media with the financial muscle to take on global powerhouses Netflix Inc. and Amazon.com Inc. as well as local like Reliance.
Zee had earlier request for an extension of a 21st December deadline by a month.
Sony said then that it want to hear Zee’s proposals on completing the “remaining critical closing conditions.”
The Securities and Exchange Board of India alleged in June that Zee fake the recovery of loans to cover private financing deals by its founder, Subhash Chandra.
Subhash Chandra and his son, Punit Goenka, “abused their position” and siphoned off funds, SEBI said in an interim order, barring Punit Goenka from executive or director appointments in list companies.
As Punit Goenka got a reprieve from an appellate authority against the Sebi order, Sony views the ongoing probe as a corporate governance issue, as per reported earlier.
Sony Pictures Networks India would have own a 50.86% stake in the merge media firm and Goenka’s family was to own 3.99% in the propose transaction, as per the 2021 agreement.
The propose merger has receive almost all regulatory approvals and would have help expand Sony’s media business in India.
