Shareholders write to Zee board seeking details of Sony’s termination letter

According to the sources, Zee shareholders have asked for the contents of Sony’s termination letter to be made public.

A section of Zee Entertainment Enterprises Limited’s (ZEEL) public shareholders have written to the company seeking details of the chain of events that led to the termination of the merger agreement with Sony Pictures Network, sources aware of the matter told Moneycontrol.

According to the sources, in a letter addressed to R Gopalan, Chairman of board, the shareholders, comprising foreign portfolio investors (FPI), mutual funds and retail investors, have asked for the contents of Sony’s termination letter to be made public.

Sony, it is understood, has cited several instances of non-fulfillment of condition precedents (CP) by ZEEL in the 62-page termination letter.

An email sent to a Zee group spokesperson remained unanswered.

“Additionally the shareholders have also asked the board as to why it did not present the true picture of the negotiations with Sony,” said a person cited above.

Also read: Zee-Sony merger called off: A timeline of how the $10 billion deal took off and derailed

“While there were several reports that relations were strained between the two sides and that Sony was unlikely to extend the merger deadline, ZEEL had maintained that the talks were between the two sides on track,” the person added.

“Shareholders have taken huge losses on account of the merger being called off,” said a second person.

Zee, on January 24, moved the National Company Law Tribunal (NCLT) and Singapore International Arbitration Centre (SIAC) against Sony Pictures. The company has also approached the Mumbai bench of the NCLT, “seeking directions to implement the merger scheme”. The proposed amalgamation, which would have created a $10 billion media entity, was called off by Sony on January 22.

Moneycontrol reported on January 21 that some of Zee’s institutional investors have written to markets regulator Sebi stating that the stalemate in the merger talks was hurting minority shareholders. Citing sources, the report further said that investors were readying an alternative merger plan for the consideration of the Sony board and may call for a shareholder vote to replace the ZEEL board through an extraordinary general meeting (EGM).

At 9.50 am,  the Zee stock was trading at Rs 164.45 on the National Stock Exchange,  up 0.77 percent from the previous close.