Sony Scraps $10 Billion Zee Merger Over Financial Failures and Regulatory Concerns

30 Jan 2024 , 10:33 AM

Sony terminated the $10 billion merger with Zee Entertainment’s Indian arm due to various reasons.

Zee failed to meet some financial terms of the deal and didn’t provide a plan to address them, as per the termination notice. Zee denied the allegations of non-compliance and accused Sony of acting in ‘bad faith’ by calling off the merger.

The merger aimed to create a media powerhouse with 90+ channels in India.

Sony cited unsatisfied ‘closing conditions’ after two years of negotiations for the termination. Zee’s alleged failure to meet financial thresholds, including cash availability, contributed to Sony’s decision, as stated in the termination notice.

Sony considered the breaches by Zee as substantive and not procedural or technical.

Zee denied all allegations and deemed Sony’s demand for a $90 million termination fee as legally untenable.

Zee’s shares dropped by approximately 30% since the deal fell through, reflecting its struggling business performance. Zee’s advertising revenues decreased, and its cash reserves dropped significantly over the years.

Sony pointed out Zee’s cash position as much below the merger agreement’s requirements.

Concerns over Zee CEO Punit Goenka facing a regulatory investigation were also cited in Sony’s notice. Zee was deemed unable to assess realistically the timeline required to resolve all outstanding issues by Sony’s termination notice.

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