In a surprising turn of events, Sony Group is contemplating the abandonment of the $10 billion merger with Zee Entertainment Enterprises Ltd, as reported by news agency Bloomberg, citing insider sources. The potential termination of the deal is fueled by a prolonged leadership standoff that has plagued the merger for the past two years.
The merger agreement, initiated in 2021, originally designated Punit Goenka, Zee’s CEO, as the head of the combined entity. However, Sony is now reconsidering this decision in light of an ongoing regulatory probe. The termination notice might be submitted before the extended January 20 deadline, citing unmet conditions for the merger.
Despite ongoing discussions between Sony and Zee, the resolution of the leadership dispute remains uncertain, adding to the complexity of the situation.
If the deal is called off, Zee could face potential defaults, leaving the company vulnerable. This development aligns with Mukesh Ambani’s strategic efforts to bolster Reliance Industries Ltd’s media ventures, negotiating a potential merger with Walt Disney’s India unit.
The Sony-Zee collaboration aimed to create a formidable $10 billion media powerhouse, poised to compete with global streaming giants like Netflix and Amazon, as well as local heavyweight Reliance. Zee had previously sought an extension of the December 21 deadline, while Sony requested proposals to address remaining critical closing conditions.
The Securities and Exchange Board of India (SEBI) had alleged in June that Zee was involved in fraudulent activities to conceal private financing deals, further complicating the regulatory landscape surrounding the deal.
