Zee Entertainment approves merger with Sony Pictures Networks India: all you need to know

Zee Entertainment Ltd (ZEEL) and Sony Pictures Networks India Ltd (SPNI) have signed a definitive agreement to merge the two companies and form a new entity. According to news reports, Punit Goenka would head the new venture as its CEO and Managing Director. According to Economic Times, if the merger goes through, it will create the second-largest entertainment network in the country, in terms of revenue. As per records filed before the stock exchanges, the SPNI, a subsidiary of Sony Pictures Entertainment (SPE), will indirectly hold the majority stake in the company with 50.86 percent of shares, while ZEEL promoters will hold 3.99 percent of the total shares. The remaining 45.15 percent stake will be given to ZEEL shareholders. SPE will also pay a non-compete fee to certain promoters (founders) of ZEEL, which would let them infuse primary equity capital into SPNI, and ultimately lead to the ZEEL promoters acquiring 2.11 percent stake in the merged company. Under the new agreement, SPNI will have a cash balance of $1.5 billion “(assuming an INR: USD exchange rate of 75:1) at closing,” which includes infusion by the promoters (founders) of ZEEL and current shareholders of SPNI. The document also said that the cash infusion will enable the new merger to strengthen its footprint in the evolving digital landscape, engage in sharper content creation across platforms and pursue other growth opportunities. As per the agreement, the ZEEL promoters (founders) have agreed to limit the equities they could own in the new company to 20 percent of its outstanding shares. According to Indian Express, the combined entity will own streaming platforms ZEE5 and SonyLIV, as well as channels such as Zee TV and Sony MAX. The merger is also expected to ease the pressure that ZEE is facing from its top shareholders, who had called for a management reshuffle in September this year. The demands of the top shareholders also included the removal of ZEE CEO Goenka from the company’s Board.