Shares of Zee Entertainment Enterprises Ltd tanked more than 25% on Tuesday, a day after Culver Max Entertainment (formerly Sony Pictures Networks India) called off its $10-billion merger with the Indian media group.
In the morning session, the 30-share BSE Sensex declined 133.76 points to trade at 71,289, while NSE Nifty fell 0.05 points to trade at 21,561
On Monday, Culver Max Entertainment, formerly known as Sony Pictures Networks India (SPNI), terminated merger agreements with Zee Entertainment, which could have otherwise created a $10 billion media enterprise in the country.
"SPNI, a wholly-owned subsidiary of Sony Group Corporation, today issued a notice terminating the definitive agreements entered into by SPNI and Zee Entertainment Enterprises Ltd (ZEEL) relating to the merger of ZEEL with and into SPNI, which was...announced on December 22, 2021," a statement by Sony Group Corporation said on Monday.
Sony sent the termination notice to Subhash Chandra family-promoted media and entertainment firm following a stalemate over who will lead the merged entity, besides not satisfying other conditions for the merger.
Sony is also seeking $90 million as break-up fees for violating the terms of the merger pact and "invoking arbitration", which ZEEL said it will contest legally.
On the other hand ZEEL said it has spent ₹366.59 crore on compliances till September 2023 for its merger with Sony.
The company spent ₹176.20 crore in the financial year that ended in March 2023. Besides, it spent ₹190.39 crore in the first six months of the current fiscal, according to a regulatory filing by ZEEL.
On December 17 last year, ZEEL had sought an extension of the deadline from Culver Max and Bangla Entertainment Pvt Ltd (BEPL) under the 2021 agreement.
SPNI had initially said that it had not yet agreed to the deadline extension request by ZEEL. But later, it agreed to discuss the matter.
The proposed $10-billion merger had already received regulatory approvals from fair trade regulator CCI, NSE and BSE, shareholders and creditors of the company.
In August last year, the Mumbai bench of the National Company Law Tribunal (NCLT) also gave a go-ahead to the merger.
Sony-Zee merger called off: Sony ends talks with Zee due to dispute over leadership of merged entity