Shares of Zee Entertainment Enterprises plummeted after Sony Group announced the termination of its merger with the Mumbai-based media company’s Indian unit.
In Tuesday morning trade, shares fell by 10% to reach 208.60 Indian rupees ($2.51).
Sony Group stated on Monday that the merger failed to meet the deadline for completion, as the closing conditions were not fulfilled.
The merger between Sony’s India unit and Zee was initially planned in 2021 to cater to the increasing demand for entertainment content from consumers. As per the agreement, Sony intended to indirectly hold a majority 51% stake in the combined company and invest approximately $1.06 billion as growth capital. Zee Chief Executive Punit Goenka was slated to lead the entity as CEO, as announced by both companies earlier.
Zee responded on Monday by refuting Sony’s claims and asserting that it would take necessary actions to protect the interests of its stakeholders. Additionally, Sony is allegedly seeking a termination fee of $90 million due to Zee’s alleged breaches of the merger agreement terms.
Zee is expected to announce its results for the third quarter ending on December 31 in the upcoming weeks. During its second quarter, Zee witnessed an 8.9% growth in net profit from the previous year, totaling INR1.23 billion, while its revenue increased by 20% to INR24.38 billion, mainly driven by higher subscription revenues.
