Zee Entertainment shares rose 24% to a new 52-week high of Rs 317 on BSE after the company’s board of directors approved its merger with Sony Pictures Networks India (SPNI). In accordance with the agreement, shareholders of Sony Pictures Networks India will own a controlling stake in the merged entity and will also inject growth capital of approximately $ 1.575 billion to be used in the pursuit of other growth opportunities, said Zee Entertainment in a swap folder. (Follow the Zee Entertainment share price here)
“Based on the existing estimated equity values of Zee Entertainment Enterprises Limited (ZEEL) and SPNI, the indicative merger ratio would have been 61.25% in favor of ZEEL. However, with the proposed injection of growth capital into SPNI, the resulting merger ratio is expected to result in 47.07% of the merged entity being owned by the shareholders of ZEEL and the remaining 52.93% of the merged entity will be owned by the shareholders of SPNI, ”Zee Entertainment said.
The two companies have entered into a non-binding list of conditions to combine the linear networks, digital assets, production operations and program libraries of the two companies. The terms sheet provides for an exclusive 90-day period during which Zee and Sony Pictures will perform mutual diligence and finalize definitive agreements. The merged entity will be a publicly traded company in India.
Punit Goenka will continue to be the Managing Director and CEO of the merged entity.
“ZEEL’s Board of Directors conducted a strategic review of the proposed merger between SPNI and ZEEL. As a board of directors that encompasses a mix of highly accomplished professionals with rich expertise in various industries, we always have the best interests of all shareholders and ZEEL in mind. We have unanimously approved the proposal in principle and advised management to initiate the due diligence process, ”R. Gopalan, president of ZEE Entertainment Enterprises, said in a statement.
At 10:11 am, Zee Entertainment shares were trading 20% higher at Rs 306.80, massively outperforming the Sensex which was trading on a flat note.