Zee Entertainment and Sony Pictures on Wednesday said they have received in-principle approval for a merger that will combine both companies’ linear networks, digital assets, production operations and program libraries.

NEW DELHI - Zee Entertainment and Sony Pictures on Wednesday said they have received in-principle approval for a merger that will combine both companies’ linear networks, digital assets, production operations and program libraries. Further, Zee Entertainment Enterprises Ltd (ZEEL) managing director and CEO Punit Goenka will lead the merged entity. The merger comes after Zee was facing a massive debt overload of over $2.5 billion.

Sony Pictures Networks India (SPNI) said the merger would bring together two leading Indian media network businesses, benefiting consumers throughout India across content genres, from film to sports.

“The combined company is expected to benefit all stakeholders given strong synergies between ZEEL and SPNI,” said SPNI.

This exclusive, non-binding pact to combine both companies’ assets will “enhance the combined company’s digital platforms across technology and content, ability to bid for broadcasting rights in the fast-growing sports landscape and pursue other growth opportunities,” said SPNI.

Further, Sony Pictures Entertainment, the parent company of SPNI, would invest growth capital so that SPNI has a cash balance of approximately $1.575 billion, it said. According to ZEEL, based on the existing estimated equity values of Zee Entertainment Enterprises Ltd and SPNI, the indicative merger ratio would have been 61.25% in favour of ZEEL. “However, with the proposed infusion of growth capital into SPNI, the resultant merger ratio is expected to result in 47.07% of the merged entity to be held by ZEEL shareholders and the balance 52.93% of the merged entity to be held by SPNI shareholders,” it said. —

Deal Points

As per the deal dynamics, the shareholders of Sony Pictures Networks India (SPNI) will hold a majority stake in the merged entity

Sony Pictures Entertainment, the parent company of SPNI, would invest growth capital so that SPNI has a cash balance of approximately $1.575 billion

With the proposed infusion of growth capital, 47.07% of the merged entity would be held by ZEEL shareholders and the balance 52.93% by Sony Pictures shareholders

Zee Entertainment shares zoom 32%

Shares of Zee Entertainment Enterprises Limited on Wednesday zoomed nearly 32% after the announcement of its merger with Sony Pictures