Zee Entertainment Enterprises Ltd (ZEEL) on Friday said it is continuing to work towards a successful closure of its USD 10 billion merger with Culver Max Entertainment, formerly known as Sony Pictures Networks India, amid reports that the Japanese entity's board meeting to take a call on the fate of the protracted deal.

In a regulatory filing, ZEEL said it was "not aware of, and cannot comment on" any board meeting held or proposed to be held by Culver Max Entertainment, given that these are internal matters of Sony.

"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 and is engaging in good faith negotiations with Sony with a view to discuss the extension of the date required to make the Scheme effective, by a reasonable period of time," it said.

The fate of the USD 10 billion merger between ZEEL and Culver Max Entertainment is hanging by a slim thread with the two parties yet to finalise a closure agreement as the end of the one-month grace period for extension of negotiations looms.

The one-month grace period for extended negotiations will end on January 20.

According to some reports, the bone of contention is the driving seat of the merged entity. As per the agreed terms & conditions, ZEEL’s Punit Goenka was to lead the merged entity.

However, Sony has expressed concerns following market regulator SEBI barring Goenka from holding managerial posts in Zee and any of the entities in connection to a fund-diversion case.

Though the SEBI order was stayed by the Securities Appellate Tribunal, Sony is not comfortable with Goenka leading the merged entity during the probe due to the stringent corporate governance policy in Japan.

The deal which was signed between Zee Entertainment and Sony Pictures Networks India in 2021 has a stipulated period of two years in which the merger was to be completed before December 21, 2023, including regulatory and other approvals with a grace period of one month to complete the transaction.

On December 17, Subhash Chandra family promoted firm had sought an extension in the December 21, 2023 deadline from Sony Group Corporation (SGC) firm Culver Max Entertainment and Bangla Entertainment Pvt Ltd (BEPL) under the Merger Cooperation Agreement dated December 22, 2021.

Earlier Sony Pictures Networks India (SPNI) stated that it has not yet agreed to a deadline extension requested by ZEEL for their merger proposed USD 10-billion merger, however, a day after it agreed to discuss.

The proposed USD 10-billion merger of ZEEL, BEPL and CMEPL has received regulatory approvals from the fair trade regulator CCI, bourses NSE and BSE, shareholders and creditors of the company.

In August this year, the Mumbai bench of the National Company Law Tribunal (NCLT) also gave a go-ahead to the merger of ZEEL and Culver Max Entertainment.

This followed an interim order by Sebi barring Essel Group chairman Subhash Chandra and Zee Entertainment Enterprises Ltd MD and CEO Punit Goenka from holding the position of a director or key managerial personnel in any listed company. The market regulator took action after they were found diverting funds from the company.

Chandra and Goenka moved the Securities Appellate Tribunal (SAT) challenging the Sebi interim order. In October, SAT quashed the Sebi interim order.

In September 2021, then Sony Pictures Networks India and ZEEL had entered into a non-binding term sheet to bring together their linear networks, digital assets, production operations and programme libraries.

If the deal is through, then the combined entity will own over 70 TV channels, two video streaming services (ZEE5 and Sony LIV) and two film studios (Zee Studios and Sony Pictures Films India), making it the largest entertainment network in India.

Subsequently, the two parties signed a definitive agreement for their merger in December 2022.

The majority of the board of directors of the combined entity would be nominated by the Sony Group and include the current SPNI Managing Director and CEO N P Singh.

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