Zee Entertainment, Sony Settle Merger Dispute

28 Aug 2024 , 11:35 AM

Shares of Zee Entertainment Enterprises Ltd. surged up to 15% on Tuesday after the company announced a settlement with Sony regarding the termination of their merger.

Zee and Sony have agreed to withdraw all claims against each other and will inform the relevant regulatory authorities about the termination of the $10 billion deal.

Both companies will also withdraw the Composite Schemes of Arrangement from the National Company Law Tribunal (NCLT).

At the time of writing, shares of Zee Entertainment Enterprises Ltd. is trading at ₹151.35 which is a 0.34% gain than the previous close. Zee Entertainment Enterprises Ltd. has witnessed a 42% dip since the beginning of the year, and 46% dip since the beginning of the year.

Zee will resolve all disputes related to the transaction with CMEPL and BEPL, who have agreed to relinquish any claims.

The settlement includes the withdrawal of all applications and claims before the Singapore International Arbitration Centre, and both parties have agreed to mutually terminate all transaction documents.

The agreement also covers the withdrawal of claims for the $90 million termination fee, damages, litigation costs, and other related expenses.

Karan Taurani of Elara Capital noted that this development removes potential financial overhangs for Zee, paving the way for better margin improvements.

Zee’s management has projected strong EBITDA margin improvements of 18-20%, with further gains expected in the festive season.

Elixir Equities’ Dipan Mehta emphasized that Zee should now be valued as a standalone media company, with potential for stock price appreciation due to reasonable valuations in a high-valuation market.

Zee’s proposed $10 billion merger with Sony was called off in January after being in progress for over two years.