The Japanese conglomerate is reportedly considering backing out of the deal due to a disagreement over the leadership of the merged entity
Sony Group Corp intends to cancel the merger agreement between its Indian unit and Zee Entertainment Enterprises Ltd, concluding a two-year saga of drama and delays in establishing a $10 billion media powerhouse as reported by Bloomberg.
The Japanese conglomerate is considering backing out of the deal due to a disagreement over the leadership of the merged entity. The initial agreement in 2021 stipulated that Punit Goenka, Zee’s Chief Executive Officer and founder’s son, would head the new company. However, Sony is now reconsidering this arrangement in light of a regulatory investigation and no longer wishes to have Goenka as the CEO, according to anonymous sources.
In the previous year, the SEBI had prohibited Subhash Chandra, then Essel Group chairperson, and Punit Goenka from serving as directors or holding key managerial positions in any listed company. They were alleged to have misused their roles in a listed firm to divert funds for personal gain. The SEBI confirmed this order in August 2023.
However, two months later, the Securities Appellate Tribunal nullified the SEBI order. The tribunal instructed Goenka to collaborate with the market regulator in its investigation against him.
Sony intends to submit the termination notice prior to the extended deadline of January 20 for finalizing the deal. The company cites unmet conditions crucial for the merger as the reason for this decision, according to an insider.
Despite prolonged discussions in recent weeks, Goenka remains firm in his desire to lead the merged entity, in accordance with the initial agreement, as reported by another source. Ongoing negotiations between the parties leave room for a potential resolution before the looming deadline.
Also read: Potential delay for Sony-Zee mega-merger as deadline talks begin
