The much-anticipated $10 billion merger between Sony Pictures Entertainment and Zee Entertainment Enterprises, poised to create an entertainment juggernaut in India, is now dangling perilously close to collapse. California-based Sony Pictures Entertainment, a key player in this transformative deal, seems poised to stick to the merger deadline of December 21, signalling a potential derailment of this colossal union, reported Mint.
Sources familiar with Sony's stance, speaking anonymously, revealed to Mint that the company is unwilling to extend the merger date further. This rigidity stems from Zee's reluctance to comply with Sony's demand regarding the appointment of the chief executive officer (CEO) for the consolidated entity.
The merger, greenlit by regulatory bodies and shareholders, had encountered a roadblock due to the contentious issue of Punit Goenka, Zee's current managing director and CEO and the son of media baron Subhash Chandra. Sony is firm on its stand that Goenka must relinquish the CEO position in the merged entity to salvage the deal.
A recent statement from Sony Pictures Networks India (SPNI) emphasized that Zee's acknowledgement of its inability to meet the merger deadline triggered discussions about extending the timeline. However, Sony is yet to agree to an extension, awaiting Zee's proposals to fulfil the remaining crucial closing conditions.
The conflict escalated when the Securities and Exchange Board of India (Sebi) accused Chandra and Goenka of diverting funds from Zee through certain promoter group firms. Although an appellate court has temporarily set aside Sebi's order pending further investigation, Sony remains steadfast in its stance, citing concerns about corporate governance and potential risks to shareholder value, reported Mint.
The impasse over the CEO appointment has left Zee's stock fluctuating in a narrow range, unsettling major shareholders and drawing criticism from shareholder advisory firms. The uncertainty looming over the merger's fate has caused unease among investors, with some opposing the reappointment of certain Zee directors at the recent annual general meeting.
As the deadline looms, the situation remains precarious. Sony seems disinclined to pursue a hostile takeover but insists on a resolution regarding the CEO position to salvage the merger. The fate of this landmark deal now hangs in the balance, with stakeholders anxiously awaiting a breakthrough or an unfortunate collapse.
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