Sony-Zee merger in turmoil over leadership dispute, claims report

livemint.com:

Zee Entertainment Enterprises (ZEEL) are facing hurdles in finalising their proposed merger due to a deadlock over leadership arrangements for the merged entity, as per a report in the Financial Express. Both parties want their respective chiefs – namely NP Singh, MD & CEO of Sony India, and Punit Goenka, MD & CEO of ZEEL, to helm the merged media company. The disagreement has stalled development even as the December 21 deadline looms.

Also Read: Sony's googly on CEO may stump Zee merger Sony is "not agreeable" to Zee's position, the FE report added. It noted that the biggest bone of contention is the now overturned Securities and Exchange Board of India's (SEBI) ban on Goenka. The regulator had banned Goenka and Essel Group chairman Subhash Chandra from holding directorships in Zee Group companies due to an ongoing probe into allegations of fund diversion by Goenka.

Sony did not respond to queries and ZEE declined to comment, the report added. A letter from Sony clarifying its stand is likely sometime next week, as per a Bloomberg report. Also Read: Sony+Disney might make better sense than Sony+Zee As per the arrangement initiated two years back, Goenka is designated to lead the merged entity, with Sony holding a 50.86 percent stake.

ZEEL promoters (Goenka family) are expected to hold a 3.99 percent stake, while the remaining 45.15 percent will be with public shareholders. However, Sony now appears hesitant to comply with Zee's stance, particularly given the circumstances surrounding Goenka. If the merger proceeds as planned, ZEEL will be delisted from stock exchanges, becoming Sony-Zee, where 100 shares of Zee will convert to 85 shares of the merged entity for shareholders.