Windfall for Jhunjhunwala's Rare Enterprises as ZEEL surges 61% in 6 days

On September 14, 2021, Rare Enterprises had bought 5 million equity shares of ZEEL at Rs 220.44 per share

Ace investor Rakesh Jhunjhunwala's Rare Enterprises has earned 61 per cent return in six days on its investment in Zee Entertainment Enterprises (ZEEL) after the company's shares zoomed 39 per cent to Rs 355.35 on the National Stock Exchange (NSE) in the intra-day trade on Wednesday. It trades in the futures & option (F&O) segment, which has no circuit limits.

On September 14, 2021, Rare Enterprises had bought 5 million equity shares of ZEEL, worth of Rs 110 crore, at a price of Rs 220.44 per share through bulk deal transactions on NSE. Based on current price, the investment is now worth Rs 177.67 crore, up a 61 per cent or Rs 67.45 crore over the acquisition price.

BofA Securities Europe SA had also purchased 4.86 million shares at an average price of Rs 236.2 apiece the same day. The names of the sellers were not ascertained immediately.

At 02:50 pm, the stock of ZEEL was trading 34 per cent higher at Rs 343.35 on the NSE, as compared to a 0.03 per cent decline in the Nifty50 index. Trading volumes on the counter surged multi-fold, with a combined around 169 million shares having changed hands on the NSE and BSE till the time of writing of this report.

On Wednesday, the Board of Directors of ZEEL unanimously provided an in-principle approval for the merger between Sony Pictures Networks India (SPNI) & ZEEL.

"The board has evaluated the merger not only on financial parameters, but also on the strategic value which Sony brings to the table. It has also concluded that the merger will be in the best interest of all the shareholders & stakeholders and is in line with ZEEL's strategy of achieving higher growth and profitability as a leading media & entertainment company across South Asia," ZEEL said in a statement. The board has authorised the management of ZEEL to initiate the required due diligence process.

Basis the existing estimated equity values of ZEEL and SPNI, the indicative merger ratio would have been 61.25 per cent in favour of ZEEL. However, with the proposed infusion of growth capital into SPNI, the resultant merger ratio is expected to result in 47.07 per cent of the merged entity being held by ZEEL shareholders and the remaining 52.93 per cent of the merged entity being held by SPNI shareholders. CLICK HERE FOR FULL REPORT