Zee Entertainment Enterprises Ltd (ZEEL) on May 23 has sought termination fee of $90 million (Rs 750 crore) from Sony Pictures Networks India, which is now known as Culver Max Entertainment Pvt. Ltd., and its entity Bangla Entertainment Pvt. Ltd. (BEPL) for pulling the plug on $10-billion merger deal in January.
"Culver Max and BEPL have failed to comply with their obligations under the Merger Cooperation Agreement (MCA). Therefore, the Company has terminated the MCA and called upon Culver Max and BEPL to pay the termination fee i.e. the aggregate amount equal to USD 90,000,000, in accordance with the MCA," said Zee in a stock exchange filing.
Sony Group Corporation had said ZEEL failed to satisfy merger conditions and also initiated arbitration proceedings before Singapore International Arbitration Centre (SIAC) claiming $90 million (around Rs 748.5 crore) as a termination fee.
ZEEL had also initiated legal actions to contest the claims of USD 90 million filed by Sony Group before SIAC.
Moreover, it had filed a petition before the Mumbai bench of the National Company Law Tribunal (NCLT), seeking a direction to Sony Group to implement the merger scheme. SIAC also denied Sony Group's plea seeking interim relief against ZEEL to restrain it from moving NCLT to enforce the failed merger of its subsidiary Culver Max with the Indian media house.
More than two years after announcing their proposed merger, Sony on January 22 announced the termination of the deal while accusing ZEEL of not meeting closing conditions even after extending their closing period by a month.
ZEEL has maintained that it was willing to meet most of the conditions.
The Mumbai bench of NCLT on August 10, 2023, approved the scheme of merger of ZEEL with Sony group entities Culver Max Entertainment and BEPL, which could have created a $10 billion media entity.
If the Sony-Zee merger was completed, the combined entity would have owned over 70 TV channels, two video streaming services -- ZEE5 and Sony LIV -- and two film studios -- Zee Studios and Sony Pictures Films India -- making it the largest entertainment network in the country.
Zee recently reported a quarterly profit for March quarter, compared with a loss a year earlier, helped by strong demand for advertising and a fall in expenses.
The company posted a profit of Rs 13.35 crore from a year-ago loss of Rs 196 crore
Domestic advertising revenue for the quarter rose nearly 11% year-on-year, driven by the continued recovery in the macro advertising environment and spending pickup by FMCG (fast-moving consumer goods) clients, Zee said in a filing with exchanges.
The company's earnings before interest, taxes, depreciation, and amortization margins expanded to 9.7% from 7.2% a year earlier.
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