Sony Group Corporation has initiated a Singapore arbitration case against Indian TV giant Zee Entertainment Enterprises Limited (ZEEL), alleging breaches of their failed merger agreement, Variety has confirmed.
The $10 billion merger, which would have seen the two entities merge their TV and streaming businesses in India, was terminated on Monday by Sony after a two-year process.
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Sony is seeking a $90 million termination fee from ZEEL. ZEEL has “initiated appropriate legal action” to contest all Sony’s claims at the Singapore International Arbitration Centre, the company said in a regulatory filing to India’s National Stock Exchange and Bombay Stock Exchange on Wednesday. In the filing, ZEEL said that the merger had been greenlit by the National Company Law Tribunal (NCLT) and that Sony’s “claim for termination fee is legally untenable and has no basis whatsoever.” ZEEL added that it has called upon Sony to “immediately withdraw the termination and confirm that they will perform their obligations to give effect to and implement the merger scheme,” as sanctioned by the NCLT. The company has asked the NCLT for “directions to implement the merger scheme.”
Meanwhile, Sony India head N.P. Singh, has issued a rallying call to his troops. That comes despite investment analyst suggestions that both companies are not of sufficient scale to compete at the front of India’s entertainment industry and are left weakened by the collapsed deal.
In an internal email to staff seen by Variety, Singh wrote: “This change in our plans allows us to step into a new phase of our story, which I believe is full of promise. Our journey towards the merger has been remarkable, showing us how resilient and dedicated we can be when working towards a common goal. As we transition from this phase, I am, along with the senior management team, committed to setting the company up for a long-term, strong future. We will actively explore new organic and inorganic possibilities to strengthen our market presence.”
“Our immediate focus will be back on unleashing our full potential, continuing to craft content that not only engages our audience but also boosts subscriber growth and revenues, thereby nurturing a culture rooted in excellence, pivotal for our ongoing growth and success. We’ve always been at our best when innovating and pushing the boundaries of what we can achieve. The M&E world is constantly changing, and our journey is not just about adapting to change; it’s about leading it,” Singh added.
“I express my deepest gratitude to each of you for your unwavering commitment and resilience. Your dedication is the driving force behind our success and the reason I have absolute faith in our bright future. Together, we have navigated challenges and celebrated triumphs, and this experience will be no different. Let us enter this next phase confidently and optimistically. We have a world of opportunities waiting for us, and I am excited to embark on this journey with you all,” Singh concluded.
ZEEL share prices, which had crashed by more than 30% on Tuesday on the news of the failed merger, rallied 8% on Wednesday as traders took advantage of the dip and bought at the cheaper price.
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