The Goenkas of the Zee group have strongly denied the merger with Sony Corp’s Indian entity to create a $10 billion media giant is on the verge of collapse after a tentative agreement was signed two years ago.

In a regulatory filing, Zee said it is "committed" to the amalgamation as it works towards a "successful closure" of the transaction.

The clarification led to a recovery if the Zee stock, which had slumped over fears of an imminent deal collapse with the extended deadline of January 21 approaching fast.

The statement came in response to a BSE notice asking Zee Entertainment Enterprises to clarify its position after a spate of news reports speculating about a rupture in the deal talks. The two sides have time till January 21 to break the impasse.

There is still no word from Sony Corp confirming that the talks are still in progress.

On Monday, Bloomberg reported that Sony planned to file a termination notice before the extended January 21 deadline. Some reports on Tuesday suggested that the two sides are continuing with “good-faith” talks.

Talks of a collapse of the deal will only serve to intensify pressure on the Goenkas to back down on their demand for the CEO’s position.

"It would be surprising if the (Zee-Sony) merger collapses as both companies will find it incredibly difficult to operate as single entities in India, keeping in mind the ongoing merger proceedings between Reliance and Disney," said Vivekanand Subbaraman, research analyst at brokerage Ambit Capital.

The report led to Zee shares slumping to a day’s low of Rs 242.30 on the BSE, a fall of almost 13 per cent. It later recouped some of the loss to end at Rs 256.25, thereby losing 7.64 per cent or Rs 21.20 over the last close.

"We wish to reiterate that the company is committed to the merger with Sony and is continuing to work towards a successful closure of the proposed merger," Zee said in a filing to the stock exchanges.

Reports of Sony terminating the merger is ``baseless and factually incorrect’’, Zee said.

On December 17, the Subhash Chandra-family promoted firm sought an extension of the December 21, 2023, deadline from Sony Group Corporation (SGC) firms Culver Max Entertainment and Bangla Entertainment Pvt Ltd under the merger co-operation agreement dated December 22, 2021.

Both Culver Max and Bangla Entertainment Pvt told Zee they will enter into ``good faith’’ negotiations with a view to discuss the extension of the date required to make the scheme effective by a reasonable period of time. This grace period will end on January 21.

According to reports, the bone of contention is the driving seat of the merged entity. As per the agreed terms and conditions, Goenka was to lead the merger entity.

However, Culver Max is insisting on making way for its Sony Pictures Network head N.P. Singh.