Negotiations for the high-stakes merger between Zee Entertainment Enterprises Ltd (ZEE) and Sony Pictures Networks India (SPNI) face a major hurdle as Sony insists on having its executive lead the combined entity, contrary to the prior agreement with Punit Goenka, as reported by livemint.
Sources revealed that the failure to reach an agreement by the December 21 deadline could jeopardize what is considered the largest merger in India’s entertainment industry. In a scheme of arrangement signed on December 21, 2021, both companies had agreed that Punit Goenka, Zee’s current Managing Director (MD) and Chief Executive Officer (CEO), would retain these positions in the merged entity for five years.
The ownership structure outlined SPNI holding 50.86%, Zee’s promoters (the Goenka family) with 3.99%, and the remaining 45.15% with public shareholders. Following this agreement, an investigation into Goenka and his father, Subhash Chandra, by the Securities and Exchange Board of India (Sebi) for alleged fund diversion, raised corporate governance concerns.
Although Goenka received temporary relief from an appellate court against a Sebi order, Sony perceives these allegations as ongoing corporate governance concerns and now advocates for its executive, NP Singh, to lead the merged entity, despite the National Company Law Tribunal (NCLT) approving the composite scheme.
“While there is no legal obstacle to appointing Goenka as MD and CEO, Sony is mindful of the ongoing investigation. Sony seeks to exercise caution and nominate NP Singh as the head of the merged company,” one source mentioned in the livemint.com report.
A senior Sony executive confirmed this decision, stating, “SPE leadership has already conveyed to NP Singh in India their desire for him to assume control of the merged entity instead of Goenka.” However, with the Securities Appellate Tribunal (SAT) lifting restrictions on Goenka, Zee officials are not in favour of this last-minute alteration, causing discussions on integration to come to a standstill.
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