ZEEL, Sony Pictures sign definitive agreements to merge

The synergy will enhance the combined company's content creation capabilities and drive digital platform growth.

Zee Entertainment Enterprises (ZEEL) and Sony Pictures Networks India (SPNI) have signed definitive agreements to merge ZEEL into SPNI and combine their linear networks, digital assets, production operations and program libraries.

The agreements follow the conclusion of an exclusive negotiation period during which ZEEL and SPNI conducted mutual due diligence.

After closing, the new combined company will be publicly listed in India. The closing of the transaction is subject to certain customary closing conditions, including regulatory, shareholder, and third-party approvals.

Under the terms of the definitive agreements, SPNI will have cash balance of $1.5 billion at closing, including through infusion by the current shareholders of SPNI and the promoters (founders) of ZEEL, to enable the combined company to drive sharper content creation across platforms, strengthen its footprint in the rapidly evolving digital ecosystem, bid for media rights in the fast-growing sports landscape and pursue other growth opportunities.

SPNI is an indirect subsidiary of Sony Pictures Entertainment Inc. (SPE). Under the transactions contemplated by a non-compete agreement, SPE, through a subsidiary, will pay a non-compete fee of Rs 1101.30 crore to certain founders of ZEEL. The fund will be used by such founders to infuse primary equity capital into SPNI, which would eventually equal approximately 2.11% of the shares of the combined company on a post-closing basis.

After the closing, SPE will indirectly hold a majority 50.86% of the combined company, the founders of ZEEL will hold 3.99%, and the other ZEEL shareholders will hold a 45.15% stake.

As part of the definitive agreements, the founders of ZEEL have agreed to limit the equity that they may own in the combined company to 20% of its outstanding shares. This construct does not provide the founders of ZEEL any pre-emptive or other rights to acquire equity of the combined company from the Sony Group, the combined company or any other party. Any shares purchased by the founders of ZEEL, must be in compliance with all applicable laws including any pricing guidelines.

ZEEL's consolidated net profit surged 187.19% to Rs 270.16 crore on 14.87% increase in net sales to Rs 1,978.79 crore in Q2 September 2021 over Q2 September 2020.

ZEEL is a media & entertainment powerhouse offering entertainment content to diverse audiences. ZEEL is present across broadcasting, movies, music, digital, live entertainment, and theatre businesses, both within India and overseas with more than 260,000 hours of television content and the world's largest Hindi film library with rights to more than 4,800 movie titles across various languages.

Shares of ZEEL were up 1.95% at Rs 355.80 on the BSE.

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