The National Company Law Tribunal (NCLT) on Thursday approved the merger scheme between Zee Entertainment Enterprises Ltd and Culver Max Entertainment (formerly known as Sony Pictures Networks India).
The tribunal passed an oral order while dismissing all the objections to the proposed amalgamation.
The announcement led to ZEEL shares zooming 18 per cent to touch a 52-week high of Rs 290.50 on the BSE, a rise of 19.99 per cent. Later, the stock settled at Rs 285.55, a gain of 17.95 per cent.
Analysts said the development would lead to the rerating of the Zee stock, and more gains could be expected in the counter.
The Zee group is among India’s first privately owned television networks and industry executives say the Sony-Zee alliance stands to become the country’s biggest industry player, with significant distribution and advertising
muscle.
In December 2021, Zee and Sony Pictures had agreed to merge their businesses.
Both the entities had approached the tribunal to sanction the merger after obtaining permissions from the NSE, BSE and other regulators such as the Competition Commission of India (CCI) and the Securities and Exchange Board of India (Sebi).
The merger exercise hit a speed breaker as various creditors of the Essel group objected to the non-compete clause of the scheme.
These included Axis Finance, JC Flower Asset Reconstruction Co, IDBI Bank, Imax Corp and IDBI Trusteeship.
They objected to the Sony group paying a non-compete fee of Rs 1,100 crore to an Essel group firm based in Mauritius.
The creditors had reportedly alleged that the clause was inserted to circumvent a direct payout to Chandra since he had provided personal guarantees to them.
The NCLT, on July 10, reserved its order on the merger after hearing objections from the creditors.
Zee also informed in a regulatory filing that it has secured the NCLT approval for the amalgamation scheme.
The proposed merger had also faced other roadblocks.
In May this year, the NSE and BSE had informed the Mumbai bench of the tribunal that they have been instructed by Sebi to submit its April order.
The market regulator had passed an ex-parte order relating to alleged fund diversion by Shirpur Gold Refinery, an Essel group firm.
In May, Sebi barred Subhash Chandra, chief of the Essel group and Punit Goenka, managing director and CEO of Zee, from holding any directorial or key managerial position in any listed companies or its subsidiaries until further orders.
The interim order from the market regulator came after it allegedly found out that Chandra and Goenka abused their position as director or key managerial person (KMP) of a listed firm for siphoning off funds for their own benefit.
While the aggrieved parties filed an appeal at the Securities Appellate Tribunal (SAT), the tribunal upheld the Sebi order.
However, Punit Goenka had reportedly said that the merger with Sony will go through even if he is not the CEO.
Last month, Zee had said that it has formed an “interim committee” to run the day-to-day operations after Punit Goenka failed to get relief from the SAT.
The development comes only a day after Zee reported a consolidated loss of Rs 53.42 crore in the June quarter on account of costs related to its merger with Sony.
With inputs from Reuters
