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HomeBusinessSony Considers Scrapping $10 Billion Zee Merger Over CEO Dispute.

Sony Considers Scrapping $10 Billion Zee Merger Over CEO Dispute.

Sony Group intends to renounce the merger agreement it had with Zee Entertainment Enterprises for its India division. This will put an end to two years of turmoil and delay in building a $10 billion media behemoth.

The Japanese conglomerate, which requested anonymity due to the sensitive nature of the information, revealed that it is contemplating terminating the merger due to a disagreement with Punit Goenka’s (founder of Zee’s) appointment as CEO of the combined business. The insider claims that even though Goenka agreed to lead the new company in 2021, Sony no longer wants him in that role following a regulatory probe.

One of the sources claims that Sony plans to file the notice of termination before the extended deadline of January 20th to finalize the agreement, citing a number of requirements that are still unmet for the merger. Someone else says that after long negotiations over the past few weeks, Goenka has stuck to his original position that he wants to lead the united organization.

Since the two sides are still in contact, a settlement could be achieved prior to the deadline.

Representatives for Sony and Zee did not immediately respond to calls and emails seeking comments.

Last-Mile Obstacle

The deal’s cancellation due to the last-lap leadership struggle not only leaves Zee vulnerable to potential defaults, but it also aligns with billionaire Mukesh Ambani’s efforts to support Reliance Industries Ltd.’s media ambitions by trying to broker a merger with Walt Disney Co.’s India division.

Building a $10 billion media conglomerate with the means to take on local titans like Reliance and global behemoths like Netflix Inc. and Amazon.com Inc. was the aim of the Sony-Zee merger.

After Mumbai-based Zee missed the December deadline, Sony awaits solutions for “critical closing conditions.”

Zee’s founder, Subhash Chandra, allegedly staged the recovery of loans in order to mask private funding agreements, according to allegations made by the Securities and Exchange Board of India in June. In an interim decision, SEBI stated that Chandra and his son Goenka had “abused their position” by siphoning off funds. As a result, Goenka is not eligible to be appointed as an executive or director of listed firms.

As Bloomberg previously reported, Sony sees the ongoing investigation as a matter of corporate governance, despite Goenka receiving a reprieve from an appeals tribunal about the Sebi ruling.

The 2021 deal stated that Goenka’s family would have controlled 3.99 percent of the planned transaction and Sony Pictures Networks India would have owned 50.86 percent of the combined media company. With regulatory barriers nearly eliminated, the proposed merger stood poised to propel Sony’s media presence in the highly coveted Indian market, home to the largest population in the world.

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