Days after a proposed merger with Sony’s India division failed, Mint revealed on Monday that Zee Entertainment (ZEE.NS), opens a new tab after founder Subhash Chandra’s family will eventually increase their ownership in the media business to 26% from 4% today.
After two years of discussions, Japan’s Sony (6758.T) closed a $10 billion merger deal with the Indian broadcaster last week. Sony is suing Zee for $90 million in termination fees for claimed contract violations, which Zee has rejected.
“I have suggested that my immediate and extended relatives buy more shares in Zee… We aim to return to 26% eventually, but it will take time,” Chandra stated in an interview with the business daily Mint.
Often referred to as the “Father of Indian Television,” Chandra founded Zee in 1992 and is currently chairman emeritus of the company.
Yes, a sizable sum of money will be required. However, we are adamant that we will not be seeking outside funding. We desire no debt,” Chandra declared.
Sony and Zee have not said specific terms of the merger were not met, although they had previously disagreed over Zee’s suggestion that its CEO, Punit Goenka, head the combined business following Goenka’s involvement in an inquiry by India’s market watchdog.
Goenka’s father Chandra said to Mint, “Punit is the right person to run the company and there is no problem with Zee.”
The deal collapse coincides with heightened industry competitiveness, as competitors Walt Disney (DIS.N) and Reliance (RELI.NS), owned by billionaire Mukesh Ambani, have opened new tabs indicating that they are holding merger talks for their India media assets.
A letter that Chandra had written to Finance Minister Nirmala Sitharaman pleading for her involvement in the transaction was also obtained by CNBC-TV18. Written on January 16, the letter was sent six days prior to Sony ending the agreement. The letter detailed how he sold a portion of his stock to pay off approximately 92% of the outstanding debt, reducing the promoter’s equity from 40% to 4%.
Zee has now responded by contacting the National Company Law Tribunal (NCLT) to request additional guidance on carrying out the merger. Additionally, the business declared Sony’s demand for a $90 million termination fee to be legally unworkable.
The F&O ban was lifted on the shares of Zee Entertainment. In the past month, the stock has dropped 40%, and in the last five years, it has halved.
