Zee shares plunge 30% after failed Sony-India merger: Biggest fall in five years

The shares of Zee Entertainment Enterprises Ltd. fell as much as 30 percent after a planned $10 billion merger with Sony Group's Indian unit was called off.

Zee shares saw a sharp fall on Tuesday. (Bloomberg)

Shares fell as much as 30 percent on the Bombay Stock Exchange, the most since January 2019, the worst performance among members of the S&P BSE 500 index. Zee was trading at 23 times its expected one-year earnings before Tuesday's decline, up from 17 in September 2021, shortly before the company announced it had agreed to merge with a Sony Group company, data compiled by Bloomberg show .

Why did Sony call off the merger of its Indian unit with Zee?

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Sony Group Corp. has Zee Entertainment Enterprises Ltd. on Monday officially announced its decision to cancel the merger with its Indian subsidiary.

Sony said in a statement: “The merger was not completed by the end date due to, among other things, the closing conditions of the merger not having been satisfied at that time.” Sony Pictures Networks India Private Ltd (SPNI) is in good faith discussions to extend the end date but the discussion period has expired without an agreement on an extension of the end date. As a result, on January 22, 2024, SPNI issued a notice to ZEEL terminating the definitive agreements.”

IN DETAIL – No deal: Sony sends Zee termination letter over India merger

Zee wants to move the court

Zee Entertainment plans to take legal action against Sony Group after the Japanese company exited a $10 billion merger in India, it said in a regulatory filing on Monday.

“The Board wishes to assure its stakeholders that the Company will take all necessary actions in the best interests of all stakeholders, including taking appropriate legal action and challenging Culver Max and BEPL's claims in arbitration. “The board has full confidence in the company’s highly experienced management team and will continue to lead the team,” he said. R. Gopalan, Chairman, Zee.

IN DETAIL – 'Punit Goenka was ready to resign': Zee plans legal action against Sony

The statement further said that Punit Goenka, managing director and CEO of Zee, “agreed to resign in the interest of the merger.”