The fate of the $10 billion merger between Zee Entertainment Enterprises and Culver Max Entertainment, formerly Sony Pictures Networks India, is hanging by a thread, with the two parties unable to finalise an agreement as the end of the one-month grace period looms.

The grace period to complete the transaction ends in less than a fortnight. Both sides have yet to agree on who would lead the merged entity.

A Bloomberg report on Monday said Sony is planning to file a termination notice before January 20 — the extended deadline to close the deal.

Sony will put forward the argument that some of the conditions necessary for the merger had not been met, the report said.

The report added that Punit Goenka, Zee’s current managing director and chief executive officer, stood his ground in his desire to lead the merged entity.

Sony is opposed to Goenka given the probe by the Securities and Exchange Board of India (Sebi) against him on alleged diversion of funds.

The parties did try to thrash out their differences in the past few weeks, but consensus has eluded them. Discussions are continuing between the two sides, and a resolution can still emerge before the deadline, the report said.

There were no official comments from both Zee and Sony on the development at the time of going to press. Observers said with the deadline less than a fortnight away, the possibility of a merger is fading.

The last announcement was made by Zee more than a fortnight ago on December 20. Zee had said that Culver Max Entertainment, formerly known as Sony Pictures Networks India (SPNI), has agreed to discuss the extension of the deadline date to make their merger scheme effective.

This was made just before the first deadline on the deal. Since then there have been no updates from either side.

The transaction, signed between Zee and SPNI in 2021, stipulated two years to complete the merger before December 21, 2023, including regulatory and other approvals.

A grace period of one month was part of the arrangement. By January 21, the one-month grace period for extended negotiations will end.

Last month, Zee sought an extension of the December 21 deadline from Sony Group Corporation (SGC) firm Culver Max Entertainment (CMEPL) and Bangla Entertainment Pvt Ltd (BEPL) under the merger co-operation agreement dated December 22, 2021.

According to the agreement entered in 2021, Goenka is to lead the merged entity.

However, Culver Max insisted that SPNI head N.P. Singh should lead the entity.

This is on account of the Sebi order that barred group chairman Subhash Chandra and Goenka from holding the position of director or key managerial personnel in any listed company.

The market regulator took action after they were allegedly found diverting funds from the company.

Both Chandra and Goenka moved the Securities Appellate Tribunal (SAT). In October, the SAT quashed the Sebi interim order. However, the regulator is still investigating the allegations.

The proposed merger has already received regulatory approvals from the fair trade regulator CCI, bourses NSE and BSE, shareholders and creditors.

In August this year, the Mumbai bench of the National Company Law Tribunal (NCLT) approved the deal.

With inputs from PTI