September 25, 2022

After three months of due diligence, Sony Photos Networks India (SPN), a subsidiary of Sony Corp’s Sony Photos Leisure (SPE), has signed definitive agreements to merge with Zee Leisure Enterprises (ZEE)

Sony will maintain majority stake within the merged firm, ZEE promoter household to personal 3.99% with an choice to extend stake as much as 20% from market.

The closing of the transaction is topic to sure customary closing circumstances, together with regulatory, shareholder, and third-party approvals.

If it goes by, the merger, which was initially introduced on September 22 when the 2 firms signed a non-binding time period sheet, will create India’s second-largest leisure community by income and spawn an entity with 75 TV channels, two video streaming providers (ZEE5 and Sony LIV), two movie studios (Zee Studios and Sony Photos Movies India), a digital content material studio (Studio NXT), and programming libraries.

Provided that ZEE’s founders have only a 3.99% stake, the success of the deal hinges on shareholder backing as a three-fourths majority can be required to approve the merger.

Invesco, which owns 17.88% stake in ZEE, had requisitioned the board to conduct a unprecedented basic assembly (EGM) of the shareholders to vote on the removing of MD and CEO Punit Goenka from the corporate’s board. ZEE board declined the request and bought an injunction towards the offshore investor from the Bombay excessive court docket. Invesco has challenged the order in entrance of a division bench and the case is being heard at current. Parallelly, the Nationwide Firm Legislation Tribunal (NCLT) can be listening to on the appliance filed by Invesco.

Below the phrases of the definitive agreements, SPN may have a money steadiness of $1.5 billion (assuming an INR to USD ratio of 75:1) at closing, together with by an infusion by the present shareholders of SPN and the promoters of ZEE.

This, the 2 firms stated, will allow the merged firm to drive sharper content material creation throughout platforms, strengthen its footprint within the quickly evolving digital ecosystem, bid for media rights within the fast-growing sports activities panorama and pursue different progress alternatives.

Below the transactions contemplated by a non-compete settlement, SPE pays a non-compete payment to ZEE’s current promoters, which can be utilized by the promoters to infuse main fairness capital into SPN, entitling them to accumulate shares of SPN, which might ultimately equal roughly 2.11% of the shares of the merged firm on a post-closing foundation.

After the closing, SPE will not directly maintain a majority of fifty.86% of the merged firm, whereas ZEE promoters will maintain 3.99%. Present shareholders will maintain a forty five.15% fairness stake within the merged firm.

In the meantime, the 2 firms stated that Goenka will lead the merged firm as its MD and CEO, whereas the Sony Group will nominate a majority of the board of administrators.

NP Singh, at the moment MD & CEO of SPN, will be part of the brand new board, post-merger. He can even assume a broader govt place at SPE as chairman of Sony Photos India (a division of SPE) reporting to Ravi Ahuja, chairman of World Tv Studios at SPE.

“It’s a important milestone for all of us, as two main media and leisure firms be part of arms to drive the following period of leisure crammed with immense alternatives,” stated Goenka. “The mixed firm will create a complete leisure enterprise, enabling us to serve our shoppers with wider content material decisions throughout platforms.”

Goenka added that he was grateful to the groups at ZEE, SPE, and SPN for his or her efforts that led to the signing of the agreements inside the stipulated timelines.

“This merger presents a major alternative to collectively take the companies to the following stage and drive substantial progress within the international enviornment. I stay up for working with the steering of the esteemed members of the mixed firm’s board to unlock the potential of this merger, and I want NP Singh all the most effective in his new position at SPE,” he added.

As a part of the definitive agreements, the ZEE promoters have agreed to restrict the fairness that they might personal within the mixed firm to twenty% of its excellent shares.

This assemble doesn’t present the promoters any pre-emptive or different rights to accumulate fairness within the merged firm from the Sony Group, the merged firm, or another celebration.

Any shares bought by the promoters of ZEE must observe all relevant legal guidelines, together with any pricing pointers.

“At the moment marks an essential step in our efforts to convey collectively a number of the strongest management groups, content material creators, and movie libraries within the media enterprise to create extraordinary leisure and worth for Indian shoppers,” stated Ahuja. “I particularly wish to thank NP Singh, who introduced us with the thought of exploring this merger nicely over a yr in the past. NP has finished extraordinary work constructing SPN into what it’s in the present day, and we stay up for persevering with our work with him in his new position after closing.”

Singh added, “This merger will create an organization that’s greatest at school and can redefine the contours of the media and leisure business. As a consultant of SPE on the board of the brand new merged firm, will probably be my endeavour to offer strategic steering and help to the corporate’s working group in reaching our imaginative and prescient. I’m additionally excited concerning the alternative of being appointed chairman, Sony Photos India, to supervise SPE’s investments and craft a wider footprint for Sony in India.”

SPE was suggested on this transaction by Morgan Stanley, KPMG Company Finance, and Shardul Amarchand Mangaldas, whereas ZEE was suggested by KPMG, JP Morgan, Trilegal, and Boston Consulting Group.

Supply hyperlink