Zee-Sony merger: NCLAT sets aside NCLT order directing bourses to reconsider approval

The National Company Law Appellate Tribunal (NCLAT) on Friday set aside an NCLT order which had directed bourses NSE and BSE to review the grant of NOC to the merger between Zee Entertainment and Culver Max Entertainment (earlier known as Sony Pictures Networks India), reports said.

Zee's merger with Sony group is likely to create a $10 billion media giant.

The appellate tribunal was hearing the appeal filed by ZEEL against the order passed by the Mumbai bench of the National Company Law Tribunal (NCLT) on May 11, 2023.

The NCLT had directed NSE and BSE to reconsider their prior approvals for the merger of ZEEL and Culver Max Entertainment. It had also asked the bourses to reassess the non-compete fee under the clause of the merger.

The said order was challenged by ZEEL before the appellate tribunal, contending that it was not granted the adequate opportunity by the NCLT to present its side and it didn't follow the principles of natural justice.

Moreover, it also contended that the NCLT doesn't have jurisdiction over non-compete issues.

As per the scheme of the arrangement, Sony will indirectly hold 50.86 per cent of the combined company. The founder of Zee will own around 4 per cent rest will be with the other shareholders of ZEEL.

Moreover, Sony Group will also pay a non-compete fee of Rs 1,100 crore to the Essel Group promoters.

Earlier this month, Japanese conglomerate Sony Group Corporation Chairman and CEO Kenichiro Yoshida said he expects the merger to be complete within the first half of this fiscal.

In September 2021, Sony Pictures Networks India and ZEEL entered into a non-binding term sheet to bring together their linear networks, digital assets, production operations and programme libraries.

The combined entity will own over 70 TV channels, two video streaming services (ZEE5 and Sony LIV) and two film studios (Zee Studios and Sony Pictures Films India), making it the largest entertainment network in India.

Shareholders of ZEEL had given their ascent to the merger last year in October weeks after the fair trade regulator Competition Commission of India gave its conditional nod with some modifications. PTI KRH KRH