Amidst legal challenges, Zee-Sony merger could be completed by December

ZEEL had a harrowing time at the courts last week, with SAT adjourning the matter concerning the ban on Zee promoter Punit Goenka by Sebi to September 27

Even as legal hurdles continue to mount against Zee Entertainment (ZEEL), the proposed $10-billion Zee-Sony merger could be completed by December, according to a report by The Financial Express (FE).

Shareholders will get 85 shares of the merged entity for every 100 shares held in ZEEL after the merger. Shares of ZEEL will get delisted and relisted after the completion of the merger process. 

Karan Taurani, senior vice president of research at brokerage Elara Capital, said the delay is marginal. He added that there could be a marginal delay in filing the merged entity's closing precedents (CPs). The record date for a merger is usually given one week before delisting. As a result, relisting could take place in the second week of December 2023.

ZEEL had a harrowing time at the courts last week, with the Securities Appellate Tribunal (SAT) adjourning the matter concerning the ban on Zee promoter Punit Goenka by the Securities and Exchange Board of India (Sebi) to September 27. The matter was pushed back for the third time in a month.

After IDBI Bank, Axis Finance became the second lender to challenge the NCLT's nod to the Zee-Sony merger in the National Company Law Appellate Tribunal (NCLAT).

Axis Finance's petition in the NCLAT said that the NCLT had failed to see that the scheme was illegal and unfair. Axis Finance also claimed that the matter concerning Goenka as head of the merged entity needs to be resolved for the NCLT nod to be fair. It breaches Sebi's order against Goenka, which bans him from holding directorships for a year, the petition said.

Senior advocate HP Ranina told FE that the resolution of the matter would depend on what the NCLAT would say on the lender's appeal. The tribunal has directed Zee to file a response to both cases before passing an order on the matter.

In December 2021, ZEEL and Sony announced a merger of their businesses. According to the transaction, Subash Chandra will be paid Rs 1,100 crore by Sony, which he will use to buy an additional 2 per cent stake in the merged entity, therefore taking his family's stake to 4 per cent in the merged entity.

According to the scheme of the merger, Sony is also infusing $1.5 billion in cash and will have representation on the board of the merged entity. It will indirectly hold nearly 51 per cent in the merged entity.