The National Company Law Tribunal (NCLT) has allowed ZEE Entertainment Enterprises Limited (ZEEL) to withdraw its implementation application that sought directions to Sony Group Corp-owned Culver Max Entertainment and Bangla Entertainment to implement the composite scheme of arrangement between the three companies.
ZEEL had filed the implementation application after Culver Max and Bangla Entertainment terminated the merger agreement on January 22 over an alleged breach of the merger cooperation agreement (MCA). Culver Max and Bangla Entertainment had also filed applications in NCLT challenging the validity of ZEEL’s application.
Sony and Zee signed definitive agreements to merge their businesses on December 21, 2021. The termination had put an end to the multi-billion-dollar mega-merger deal that had been in the making for over two years.
In April, ZEEL said that the withdrawal of the merger implementation application will allow it to pursue its claims against Culver Max and Bangla Entertainment before the Singapore International Arbitration Centre (SIAC) and other forums.
The company also said that the decision will allow it to pursue growth and evaluate strategic opportunities to generate higher value for all shareholders.
While terminating the merger agreement, Sony’s India entities had initiated arbitration proceedings against ZEEL before SIAC and had sought $90 million in termination fees from the Indian entertainment major for alleged breaches of the MCA.
Sony’s decision to call off the deal on January 22 set a chain reaction, with ZEEL’s stock price crashing down 33% to a 52-week low of Rs 152.5 on January 23, compelling the company to take drastic measures to return to the growth path after four years of declining profits and muted revenue growth.
“The immediate priority for the company is to focus on performance and achieve its targeted goals for the future. We have reviewed the key steps taken by the management over the last few months that are result-oriented, and we believe that the company is well poised to chart a stronger growth trajectory,” said ZEEL chairman R. Gopalan.
“Hence, after seeking an independent legal opinion, the Board has advised the management of the company to withdraw the implementation application filed before the Hon’ble NCLT. The Board remains focused on maximising shareholder value, strengthening the company’s claims in arbitration, and enabling the company to explore strategic opportunities.”
ZEEL has been on an aggressive cost-cutting spree to achieve its target of 18–20% EBITDA margin by FY26. The company has decided to lay off 15% of its 4,500 staff.
