The Sony-Zee mega merger still hangs in the balance. Sony Pictures Networks India (SPNI) said it hasn’t yet decided on extending the Thursday, December 21, deadline to complete the merger with Zee Entertainment Enterprises Ltd (ZEEL).
The Punit Goenka-led Zee had asked for an extension on December 17.
In a statement, the Sony Group Corporation-owned company said Zee has acknowledged that it will not be able to meet the deadline. SPNI said it looks forward to hearing ZEEL’s proposals and how it plans to meet the remaining key conditions.
Actively engaged
“Zee’s notice to BSE and NSE dated December 17 is an acknowledgement that they will not be able to meet the December 21, 2023, deadline to close the SPNI/ZEE merger,” the SPNI statement read.
It added that the ZEEL notice triggers an existing contractual provision in the deal that allows for both parties to discuss the possibility of extending the deadline. “SPNI is required to start those conversations but has not yet agreed to a deadline extension. We look forward to hearing Zee’s proposals and how they plan to complete the remaining critical closing conditions,” the company said.
Zee’s stock price dropped 3.2% to Rs 271.25 apeice while BSE Sensex edged up marginally.
The company’s demand for an extension will have to be considered by Sony under the terms of their agreement, said Shafaq Uraizee Sapre, Mumbai managing partner of law firm Chandhiok and Mahajan. “The current issue is not of the nature that cannot be resolved by mutual agreement and thus may not lead to any withdrawal of the merger,” she said. “We believe that even the consideration of an extension of timelines indicates a positive move, signalling that the parties are still committed to fulfilling their obligations under their merger agreement and completing the merger.”
A senior lawyer said the deal will not collapse if the two parties are unable to complete the merger by the December 21 deadline.
“The long-stop date is usually a placeholder to get the parties to complete their intended acts within that time,” said the lawyer, who didn’t want to be named. “Unless provided in the contract to be of essence to the agreement, it usually doesn’t have that level of importance. In the present circumstance, where the matter has moved on from just contractual stipulations to statutory approvals, the importance of adherence to such a date is even more diminished.”
ZEEL has been actively engaged with Sony to complete the necessary Conditions Precedent (CPs) as per the Composite Scheme of Arrangement, said a person aware of the process. “Most of the CPs have already been closed.”.
Media analyst Karan Taurani said Sony has put the onus of completing the deal on Zee by asking it to meet the remaining terms.