InvestorQ : Can you tell me about the details of the Zee merger with Sony and if the problem with their large shareholders is resolved?
manisha Kolvenkar made post

Can you tell me about the details of the Zee merger with Sony and if the problem with their large shareholders is resolved?

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Crowny Pinto answered.
5 months ago
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Here are some of the key highlights of the Zee Sony merger deal.

· Under the terms of the merger deal, existing shareholders of Zee Entertainment will get 85 shares in Sony Pictures Network for every 100 shares held by them. But this will be on a diluted capital base.

· The Subhash Chandra family, also called the Essel Group, will get a non-compete fee of Rs.1,101.30 crore from Sony Pictures. This will be converted into a 2% stake in the merged entity taking the stake of Essel group in the merged entity to 3.99%.

· Effectively, 2 things work in the favour of the Essel group. Firstly, Punit Goenka will continue as CEO of the merged entity. The 2% non-compete stake in the merged entity will take the Essel group stake in the post-merger entity to 3.99%.

· During the same period, the stake of Invesco Fund, which held 17.88% stake in the pre-merger Zee will be left with just 8.07% stake in the post-merger entity, resulting in a substantial narrowing of holding gap between Essel family and Invesco.

· Since Zee does not have the cash flows to infuse into the merged entity, a total of 26.5 crore fresh shares will be issued in exchanges for Sony Pictures infusing fresh funds of Rs.7,949 crore into the merged entity. This will be meant to bankroll its future plans.

· How will the final numbers of ownership look like? Post-merger, Sony Pictures Network will hold 50.86% in the merged entity, Essel family will hold 3.99% and other shareholders of Zee will hold 45.15% in the combined entity.

· In terms of business spread, the merger of Zee Entertainment and Sony Pictures will create the largest diversified television network in India which straddles news, current affairs, sports and regional and Hindi entertainment.

· Zee and Sony Pictures will combine their linear networks, digital assets and their production operations for cost efficiencies. There will also be merging and sharing of the vast libraries of programs of both the media houses.

It surely looks like the Invesco controversy has been laid to rest as they have also put their approval for the merger process.

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