Zee chooses expansion above lawsuit
The Zee Group dropped its suit against Sony Corp., a large Japanese company, on Tuesday. Sony had withdrawn a $10 billion merger proposal from the Mumbai bench of the National Company Law Tribunal, citing a desire to “better serve shareholders interest.”
Zee stated in a statement that after considering legal counsel and the management’s action-oriented measures, the board has decided to drop the lawsuit against Sony. The statement said that “the board has advised the management to withdraw the petition in the interest of shareholders,” but it also stated that they would be pursuing their claims against Sony at the Singapore International Arbitration Centre with vigor, including a $90 million damages claim.
It went on to state that in order to increase value for all shareholders, the future would see a focus on expanding the business and seizing additional strategic possibilities. It said, “In the current arbitration proceedings at the Singapore International Arbitration Centre and in other fora, we will aggressively pursue all its claims against Sony.”
On January 24, 2024, Zee Entertainment, headed by Puneet Goenka, filed a motion with the NCLT asking for permission to proceed with the $10 billion merger plan between Zee, Culver Max Entertainment, the domestic division of Sony, and Bangla Entertainment. If the agreement had gone through, over 75 channels and several other media verticals, including OTT platforms, would have made up the biggest media firm in India.
With reference to several violations of the merger agreement, such as Goenka’s refusal to resign from managerial roles and Sony’s failure to fulfill financial targets, Sony made vague references to scrapping the proposal, which was first announced in December 2021. The father-son team’s two-year exclusion from the markets by Sebi in the middle of last year due to money diversions and other listing agreement violations was another catalyst.
“The board decided to withdraw the implementation application based on the advice it obtained after a thorough legal expert consultation. Additionally, by making this choice, we will be able to assess strategic prospects and drive growth in order to increase value for all shareholders.
The board is still dedicated to assessing the management’s strategic, tactical actions and offering prompt assistance. We will be able to vigorously prosecute all of our claims against Sony in the current arbitration with this ruling, the statement said.
Events taking place
December 2021: Sony Corp. of Japan and Zee announce a $10 billion merger
August 2023: Citing financial diversions and other wrongdoings, Sebi bans Zee promoters Subhash Chandra and his son Puneet Goenka from the market and from any managerial position inside the firm for a two-year period.
Dec 2023: Sony predicts a difficult transaction.
Sony officially cancels the merger deal on January 24, 2024.
January 31, 2024: Zee goes to NCLT Mumbai to ask for guidance on how to proceed with Sony’s merger plan.
Feb. 2024: Zee files a motion with the Singapore Arbitration Centre to sue Sony for $90 million in damages.
Zee voluntarily withdraws its merger petition from the NCLT on April 16, 2024.
