Business India

Posted by admin on 2024-08-27 |

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Zee Entertainment Enterprises announced that it has entered into an agreement to resolve all disputes with Sony regarding the termination of their merger.

After months of intense legal battles over a $90 million termination fee linked to a failed merger, Sony Pictures Networks India (now called Culver Max Entertainment) and Zee Entertainment Enterprises Ltd have opted to settle their disputes amicably through a non-cash agreement, enabling both companies to move forward independently.

Sony Terminates Merger Agreement

On January 22, Sony terminated the merger cooperation agreement and the composite scheme of arrangement that had been initially signed on December 22, 2021. Sony promptly demanded $90 million in termination fees and filed a claim with the Singapore International Arbitration Centre (SIAC).

Zee Challenges Termination Fee

In response to Sony's actions, Zee filed an appeal with the Mumbai bench of the National Company Law Tribunal (NCLT), challenging Sony's decision to terminate the merger and disputing the legitimacy of the termination fee. Additionally, Zee initiated legal proceedings to contest the $90 million termination fee.

Breakthrough Announced Following Leadership Change

A major breakthrough in the dispute was announced on Tuesday, just one day after Sony appointed Gaurav Banerjee as its new managing director and CEO. In a joint statement, the two companies revealed they had reached a "comprehensive non-cash settlement, amicably resolving all disputes.”

Details of the Settlement

Under the terms of the settlement, both companies have agreed to withdraw their claims from SIAC and cease all related legal proceedings in the NCLT and other judicial forums. The joint statement emphasized, "Under the terms of the settlement, none of the parties will have any outstanding or continuing obligations or liabilities to the other. The settlement stems from a mutual understanding between the companies to independently pursue future growth opportunities with a renewed purpose and focus on the evolving media and entertainment landscape, signifying the definitive conclusion of all disputes."

The Failed Merger: A Missed Opportunity

The joint statement now officially closes the chapter on what could have been India's largest media merger, potentially creating a $10 billion conglomerate. Although the deal had received regulatory approvals from the NCLT and the Competition Commission of India, it encountered a significant roadblock when the Securities & Exchange Board of India (SEBI) barred Zee's MD and CEO, Punit Goenka, from holding any top management positions due to allegations of fund diversion.