NCLT upholds ZEE and Sony merger

NCLT upholds ZEE and Sony merger

The creditors Axis Finance, JC Flower Asset Reconstruction, IDBI Bank, Imax Corp, and IDBI Trusteeship, had opposed it

The Mumbai bench of the National Company Law Tribunal (NCLT) has upheld the merger between Zee Entertainment Enterprises (ZEE) and Culver Max Entertainment (earlier known as Sony Pictures Networks India).

A Coram of Justice HV Subba Rao (Judicial Member) and Madhu Sinha (Technical Member) pronounced the verdict, dismissing all objections made by creditors - Axis Finance, JC Flower Asset Reconstruction Co, IDBI Bank, Imax Corp, and IDBI Trusteeship.

In September 2021, Culver Max and ZEE entered into a non-binding term sheet agreement to bring together their digital assets, linear network, production operations and program libraries.

As per the merger arrangement, the Sony Group would indirectly hold 50.86 percent of the combined company, while the founder of ZEE would own around 4 percent. The rest would be distributed amongst ZEE’s shareholders.

Sony also agreed to pay Rs.1,100 crore to the Essel Group promoters as a 'non-compete' fee.

Thereafter, both media houses approached the NCLT for sanctioning the merger after receiving approvals from authorities. However, the creditors opposed it, particularly the scheme’s non-compete clause.

ZEE apprised the Court that the merger received approvals from the National Stock Exchange (NSE), the Bombay Stock Exchange (BSE) and regulators - the Competition Commission of India (CCI), and the Securities and Exchange Board of India (SEBI).

However, NSE and BSE opposed the merger. They pointed to an order passed by the Securities Appellate Tribunal (SAT) against Zee group heads.

SAT had upheld SEBI’s interim order barring the Essel Group Chairman Subhash Chandra and Chief Executive Officer of Zee, Punit Goenka from holding directorial or key managerial posts in the listed companies.

Meanwhile, ZEE contended that the value claimed by the creditors was over Rs.1,200 crore. By opposing the merger, they were holding the company to ransom.

Thus, the tribunal dismissed all objections, upholding the merger between the two media houses.

Zee was represented by Senior Advocate Janak Dwarkadas briefed by a team led by Advocate Nitesh Jain from Trilegal.