Zee Entertainment Enterprises Ltd (ZEEL) is seeking rapprochement with Sony Group as it makes a last-ditch effort to resurrect a USD 10 billion merger, according to industry sources.

After the Japanese multinational firm pulled the plug on its USD 10 billion merger deal in January, the Indian company reached out again to Sony to reconsider the termination and offered for talks this month, a source said.

On the other hand, Sony is understood to be evaluating the proposal from Zee.

Comments from Sony Picture Networks India could not be obtained as an e-mailed query remained unanswered.

A Zee spokesperson said, “Since the matter is subjudice we have no comments to offer.” Another source said ZEEL never stopped working for a possible reconciliation dialogue citing that it was ZEEL that moved to NCLT to make the merger happen.

“The ball is in Sony's court. They need to respond if the deal has to be revived,” the source said.

The development comes amidst the two parties filing cases against each other after the deal collapsed. Sony had initiated arbitration proceedings before The Singapore Arbitration Center (SIAC) claiming USD 90 million (around Rs 748.5 cr) as a termination fee.

On the other hand, ZEEL filed a petition before the Mumbai bench of the National Company Law Tribunal (NCLT), seeking a direction to Sony Group to implement the merger scheme. SIAC also denied Sony Group's plea seeking interim relief against ZEEL to restrain it from moving NCLT to enforce the failed merger of its subsidiary Culver Max with the Indian media house.

ZEEL also initiated appropriate legal actions to contest the claims of USD 90 million filed by Sony Group before SIAC.

More than two years after announcing their proposed merger, Sony on January 22 announced the termination of the deal while accusing ZEEL of not meeting closing conditions even after extending their closing period by a month.

ZEEL has maintained that it was willing to meet most of the conditions.

Sources said during the one-month extension of the negotiation period, ZEEL had proposed an extension of a further six months for closing the transaction, even offering to discuss any other alternate closing timeline that Sony believed would be reasonable and achievable.

ZEEL had also offered that its MD and CEO Punit Goenka would not lead the merged entity as per the condition.

Earlier, the market watchdog SEBI had barred Essel Group chairman Subhash Chandra and Goenka from holding the position of a director in any listed company. The market regulator took the action after they were allegedly found diverting funds from the company.

However, this order was quashed by the Securities Appellate Tribunal (SAT). But the investigations against Goenka by SEBI (Securities and Exchange Board of India) are still pending.

Last week, Sony’s top management in its December quarter earnings said it will seek various options, including finding another opportunity to replace the plan and organic growth opportunities in India, which has great potential in the long term.

"India on a long term basis has a great growth potential. It's a very appealing market. Therefore, we will try to seek various opportunities and if we can find another opportunity that would replace this type of plan," said Hiroki Totoki, president, COO & CFO of Sony when asked about the company's strategy in India after the termination of the proposed merger.

While, Goenka in the first earning call of the company last week, after the deal to merge with Sony collapsed, said ZEEL is focusing on a three-pronged approach -- frugality, optimisation and sharp focus on quality content.

The company aspires for an 8 to 10 per cent CAGR revenue growth, with digital business growing at a much faster pace, he said.

ZEEL, in the financial statement of the December quarter also informed it spent nearly Rs 427 crore on the merger process.

Overall Rs 250.73 crore were spent on the merger in the nine months of FY24. It had spent Rs 176.20 crore in FY23 for the deal, announced in December 2021.

If the merger were completed, the combined entity would have owned 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 the country.

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