Sony Calls Off $10 Billion Merger With Zee? Here's A Timeline Of What Went Down

After a two-year saga, Sony Group has finally informed Zee Entertainment Enterprises Ltd. that it officially intends to call off the $10 billion merger, which thus leaves Zee vulnerable to competition as its rivals keep getting stronger.

And that's not all. Upon terminating the agreement on Monday, Sony has further sought $90 million (Rs 748 crore) in termination fees from Zee. But it is also being said that Zee is soon expected to take legal action against Sony.

Why Sony Has Cancelled $10 Billion Merger With Zee?

zee sony merger/moneycontrol

Those familiar with the plan said that Sony sent a termination letter to Zee early on Monday because certain conditions regarding the anticipated merger had not been met.

The merger cancellation comes after a standoff between the Zee and Sony over Zee CEO Punit Goenka and his leadership of the combined company during an inquiry into his behavior by India's markets regulator SEBI. Zee was adamant that Goenka would head the new company as per the 2021 agreement, but Sony was hesitant to appoint him in light of the regulatory investigation into him.

The Zee-Sony merger agreement, which would have created a $10 billion media giant that could have challenged heavyweights such as Netflix and Amazon, now looks to have been derailed by the standoff.

Also Read: From Yahoo-Microsoft To Twitter-Facebook: 10 Big Mergers That Did Not Happen

What All Has Happened: A Timeline Of Zee-Sony Merger Talks

sony zee merger timeline/fortune

September 21, 2021: Zee's board of directors unanimously approved Sony India merger.

February 2022: Zee faces insolvency proceedings from IndusInd Bank files.

July 29, 2022: National stock exchanges BSE and NSE approve Sony-Zee merger.

October 4, 2022: Merger approved by Competition Commission of India (CCI, with voluntary structural remedies.

December 2022: Big setback for Zee as IDBI Bank moves to National Company Law Tribunal (NCLT) against ZEE, seeking to recover Rs 149.60 crore in dues through insolvency proceedings.

February 22, 2023: In response to IndusInd Bank's petition, NCLT accepts insolvency proceedings against ZEE.

May 2023: NCLT directs both NSE and BSE to reconsider their initial approvals for Sony-Zee merger.

June 12, 2023: Essel group's CEO Subhash Chandra and Zee CEO Punit Goenka banned by SEBI from holding any senior positions, for allegedly siphoning off funds.

August 10, 2023: NCLT dismisses objections from creditors and gives nod to Sony-Zee merger.

August 14, 2023: SEBI announces investigation on misappropriation of funds by Subhash Chandra and Punit Goenka.

August 26, 2023: Punit Goenka challenges SEBI's order, moves to Securities Appellate Tribunal (SAT).

September 2023: Both IDBI Bank and Axis Finance challenge NCLT's approval for Sony-Zee merger in the National Company Law Appellate Tribunal (NCLAT).

October 30, 2023: SAT stops SEBI's order restraining Punit Goenka from holding MD & CEO posts.

November 2023: Sony puts forth NP Singh as recommendation to lead the merged company instead of Punit Goenka.

December 3, 2023: IDBI Trusteeship appeals at the NCLAT against Zee's subsidiary Essel Group.

December 15, 2023: NCLAT issues notice to Zee regarding petitions filed by both IDBI Bank and Axis Finance.

December 17, 2023: Zee seeks an extension of the deadline for its merger with Sony.

December 20, 2023: Zee claims it is in talks with Sony to extend merger deadline.

January 18, 2024: Punit Goenka offers to step down from the role of Zee CEO.

January 22, 2024: Sony officially notifies Zee about its decision to call off the $10 billion merger.

Is A Sliver Of Hope Still Left?

sony zee merger punit goenka/getty

After a 30-day grace period ended over the weekend due to the inability of the parties to agree on a deadline set in late December, Sony decided to send out the termination letter. But all may not be over for the possible $10 billion merger deal, as a Bloomberg report has mentioned that Sony might take another look at a merger proposal if Goenka is fired from Zee, which has been experiencing declining financial health.

Zee Likely To Sue Sony India

Responding to Sony India's claims and Rs 748 crore termination fee against Zee, the Indian media giant said it will take legal action against Sony Group following the termination of $10 billion merger plans. As per an ET report, Zee's board of directors, at their meeting today (January 22), said that all steps were taken by Zee to implement the merger. Zee said it held several talks to consider an extension of the merger completion timeline, but the talks did not materialise.

Zee further mentioned that Punit Goenka, MD & CEO of Zee, was agreeable to step down in the interest of the merger and proposals in this regard were discussed, including for appointment of a director on the Board of the merged company, protections for conduct of pending investigations and legal proceedings in the best interest of ZEE¡¯s directors and shareholders and the consequent modifications to the scheme to incorporate the same.

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