In a significant development, Sony Group has officially terminated the proposed $10 billion media merger deal with Zee Entertainment Enterprises (Zee), reported Bloomberg News on Monday. The termination notice was sent after the expiration of a 30-day grace period over the weekend, during which the two parties failed to reach a consensus on the deadline set in late December 2021.
The media conglomerates announced the merger deal in December 2021, but it encountered numerous roadblocks, leading to a delay of nearly two years. According to sources familiar with the matter, Sony’s termination letter cited unmet conditions outlined in the merger agreement as the reason for scrapping the deal.
The primary cause of termination stems from a prolonged disagreement between the companies, particularly regarding the leadership question for the merged entity. The leadership dispute revolved around whether Punit Goenka, Zee’s Chief Executive Officer, would assume the leadership role in the combined company, especially amid an ongoing regulatory investigation into his conduct by the Securities and Exchange Board of India (SEBI).
The impasse on leadership issues effectively derailed the merger, which aimed to create a formidable $10 billion media conglomerate capable of competing with global streaming giants like Netflix Inc. and Amazon.com Inc.
Sony’s termination notice comes after the expiration of the 30-day grace period, and no official statements have been issued by either party regarding the termination of the merger deal.
Earlier this month, Sony had expressed its intention to abandon the merger due to the unresolved leadership dispute. While Zee indicated ongoing negotiations to salvage the deal, the termination notice suggests that the merger will not proceed.
The primary point of contention was Zee’s insistence on Punit Goenka leading the new entity, as per the terms agreed upon in the 2021 pact. However, Sony expressed reservations due to regulatory scrutiny surrounding Goenka.
As the termination unfolds, it remains to be seen how Zee will respond, with potential legal action seeking damages resulting from the unsuccessful merger deal. The termination marks the end of a complex and protracted merger process that had drawn attention in the media and business sectors.