The Japanese conglomerate is reportedly reevaluating its stance on Punit Goenka as the CEO of the merged entity in light of an ongoing regulatory probe. But experts believe Sony-Zee might go ahead with the merger as Disney-RIL talks are gaining traction
Sony-Zee merger was announced two years ago, in an attempt to create India’s largest broadcast company. Image: Shutterstock
As news of the Sony Group calling off the proposed $10 billion merger with Zee Entertainment’s India operations came out, shares of Zee Entertainment crashed by 10 percent to Rs 249 per share on January 9. However, Zee Entertainment soon issued a clarification stating the news of the Sony-Zee merger termination was baseless and factually incorrect. “Zee is committed to the merger with Sony and is continuing to work towards a successful closure of the proposed merger,” the company said in a regulatory filing today. The merger was announced two years ago, in an attempt to create India’s largest broadcast company.
However, recent developments have thrown a wrench into the agreed-upon leadership structure. Sony is said to be reevaluating its stance on Goenka as the CEO in light of an ongoing regulatory probe.
Last year, the Securities and Exchange Board of India (SEBI) had barred Goenka from executive or director appointments in listed companies. “There were accusations of loan recovery falsification and financial misconduct involving Zee’s founder and Goenka’s father Subhash Chandra. Sony sees this ongoing probe as a corporate governance issue,” says Abhishek Malhotra, managing partner, TMT Law Practice. The company is reportedly planning to file a termination notice to Zee by January 22, citing unmet conditions for the merger. However discussions are still ongoing between the two sides.