Sony is planning to scrap the merger of its Indian unit with Zee Entertainment, more than two years after the deal was announced, Bloomberg reported.
According to the report, the Japanese conglomerate is planning to call off the deal due to a conflict over whether Zee chief executive officer Punit Goenka, also the founder’s son, would lead the merged entity.
As per the agreement signed in 2021, Goenka would lead the new company. But Sony does not want him as the CEO amid a regulatory probe.
Last year, the Securities Exchange Board of India (SEBI) had barred then Essel Group chairperson Subhash Chandra and Punit Goenka from holding the position of a director or key managerial position in any listed company. The duo was accused of abusing their position as directors of a listed firm for siphoning off funds for their own benefit. The SEBI passed the comfirmatory order in August 2023.
Two months later, the Securities Appellate Tribunal quashed the SEBI order while directing Goenka to cooperate with the market regulator in probe against him.
According to the Bloomberg report, Sony is planning to file a termination suit before a January 20 extended deadline for closing the deal, saying that some of the conditions set have not been met. Goenka has stood his ground and wants to helm the merged entity.
What happens if deal is scuttled?
If the deal is scuttled, it will leave Zee vulnerable to possible defaults. The development comes at a time when Mukesh Ambani is seeking to add new fuel to Reliance Industries’ media ambitions by negotiating a merger with Walt Disney Co. India unit.
The Sony-Zee combine had imed to create a $10 billion media behemoth with the financial muscle to take on global powerhouses Netflix Inc. and Amazon.com Inc. as well as local heavyweights like Reliance.