NCLT allows withdrawal of merger scheme between Zee, Sony; recalls August 2023 order

The National Company Law Tribunal (NCLT) has allowed withdrawal of its order approving the merger of Zee Entertainment and Sony Pictures Networks India and recalled its earlier order passed in this regard. 

The Mumbai bench of the NCLT had last week recalled its order passed on August 10, 2023, which approved the merger of Zee Entertainment with Sony Pictures Networks India. 

Acknowledging that the parties have “mutually consented” to withdraw the scheme on account of the settlement agreement and resolutions passed to withdraw the amalgamation, the board withdrew its order. 

“Accordingly, this Bench allows the withdrawal of the Scheme of Amalgamation and hereby recalls order dated 10.08.2023 in C.P.(CAA) No. 209 of 2022,” said NCLT order, a copy of which was shared to bourses by Zee on September 12. 

On August 27, ZEE Entertainment and Sony Pictures Networks India announced settling their six months long dispute related to the failed $10-billion merger and agreed to withdraw all claims against each other. 

As part of that, both had mutually agreed to withdraw all respective claims against each other in the ongoing arbitration at the SIAC and all related legal proceedings initiated in the NCLT and other forums, a joint statement stated. 

Both Zee and Sony had claimed a termination fee of $90 million (around Rs 748.7 crore) from each other for not complying to the Merger Cooperation Agreement (MCA) signed in December 2021. 

In January this year, Sony had pulled out from the proposed $10.5-billion merger with ZEE Entertainment Enterprises Ltd citing failure to meet certain “closing conditions” by the Indian firm. 

The NCLT on August 10, 2023, had approved the merger of Zee Entertainment and Sony Pictures Networks India, paving the way for the creation of a $10-billion media giant in the country.

In January 2024, the merger between Sony and Zee was called off due to disagreements over more than 20 compliance issues. The disagreement involved issues such as Zee's failure to dispose of certain Russian assets and its $1.4 billion cricket rights deal with Disney.

One of the major reasons the failed deal being derailed was the lack of consensus over who would head the merged entity. While ZEEL MD and CEO Punit Goenka earlier agreed upon as the candidate to be at the helm of the merged company, Sony reportedly sought a reconsideration after Goenka came under a SEBI probe.

(With inputs fromPTI)