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Sony Group Corp is planning to call off its merger with Zee Entertainment Enterprises Ltd, Bloomberg reported on Monday, citing people aware of the matter. The Japanese conglomerate is likely to send the termination letter to ZEEL before January 20.
The Bloomberg report said that Sony is planning to cancel the deal owing to the standoff over who will lead the merged entity. There has been confusion over whether Zee's chief executive officer, Punit Goenka, also its founder's son, will lead the company or not. Sony reportedly does not want Goenka to lead the merged entity amid a regulatory probe.
Last month, the two companies were given a one-month grace period to close the merger of their India operations that would have created a $10 billion media behemoth.
Last month, the two companies were given a one-month grace period to close the merger of their India operations that would have created a $10 billion media behemoth. Zee had requested an extension. Sony said it wanted to hear Zee's proposals for completing the "remaining critical closing conditions".
The report, however, added that the negotiations are still going on, and a resolution may emerge before January 20.
In June last year, the Securities and Exchange Board of India (Sebi) had alleged that Zee faked the recovery of loans to cover financing deals by Subhash Chandra, Zee's founder. The regulator said Chandra and Goenka "abused" their position and siphoned off the funds. It also barred Goenka from executive or director appointments in listed companies.
Goenka got a reprieve from the Securities Appellate Tribunal (SAT) but Bloomberg said that Sony sees the ongoing probe as a corporate governance issue.
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In the merged entity, Sony would have owned a 50.86 per cent stake with 3.99 per cent going to the Goenka family. The merger has received all regulatory approvals in India.
The shares of ZEEL closed 1.84 per cent in the red on Monday at Rs 277.45 apiece on BSE.
