Mumbai: Sony Pictures Networks India Private Limited (SPNI) and Zee Entertainment Enterprises (Zeel) announced early on Wednesday that they have signed definitive agreements to merge Zeel with and into SPNI and combine their linear networks, digital assets, production operations, and program libraries.
The agreements follow the conclusion of an exclusive negotiation period during which Zeel and SPNI conducted mutual due diligence. After closing, the new combined company will be publicly listed in India. The closing of the transaction is, however, subject to certain customary closing conditions, including regulatory, shareholder, and third-party approvals.
Under the terms of the definitive agreements, SPNI will have cash balance of $1.5 billion closing, including through infusion by the current shareholders of SPNI and the promoters (founders) of Zeel, to enable the combined company to drive sharper content creation across platforms, strengthen its footprint in the rapidly evolving digital ecosystem, bid for media rights in the fast-growing sports landscape and pursue other growth opportunities.
SPNI is an indirect subsidiary of Sony Pictures Entertainment Inc (SPE). Under the transactions contemplated by a non-compete agreement, SPE, through a subsidiary, will pay a non-compete fee to certain promoters (founders) of Zeel, which will be used by such promoters (founders) to infuse primary equity capital into SPNI, entitling the promoters (founders) of Zeel to acquire shares of SPNI, which would eventually equal approximately 2.11 per cent of the shares of the combined company on a post-closing basis. After the closing, SPE will indirectly hold a majority 50.86 per cent of the combined company, the promoters (founders) of Zeel will hold 3.99 per cent, and the other Zeel shareholders will hold a 45.15 per cent stake.
Punit Goenka to lead the combined entity
Punit Goenka will lead the combined company as its managing director & CEO. The majority of the board of directors of the combined company will be nominated by the Sony Group and will include the current SPNI managing director and CEO, N P Singh. On closing, Singh will assume a broader executive position at SPE as chairman, Sony Pictures India (a division of SPE) reporting to SPE’s chairman of Global Television Studios and SPE Corporate Development Ravi Ahuja.
“It is a significant milestone for all of us, as two leading media & entertainment companies join hands to drive the next era of entertainment filled with immense opportunities. The combined company will create a comprehensive entertainment business, enabling us to serve our consumers with wider content choices across platforms,” said Zeel MD and CEO Punit Goenka. “This merger presents a significant opportunity to jointly take the businesses to the next level and drive substantial growth in the global arena.”
Synergy in Scripted, factual, and sports programming
The combination of Zeel and SPNI is expected to achieve business synergies and given their relative strengths in scripted, factual and sports programming, respective distribution footprints across India and iconic entertainment brands, the combined company try to meet the growing consumer demand for premium content across entertainment touchpoints and platforms.
As part of the definitive agreements, the promoters (founders) of Zeel have agreed to limit the equity that they may own in the combined company to 20 per cent of its outstanding shares. "This construct does not provide the promoters (founders) of Zeel any pre-emptive or other rights to acquire equity of the combined company from the Sony Group, the combined company or any other party. Any shares purchased by the promoters (founders) of ZEEL, must be in compliance with all applicable laws including any pricing guidelines," it said in a statement.
“Today marks an important step in our efforts to bring together some of the strongest leadership teams, content creators, and film libraries in the media business to create extraordinary entertainment and value for Indian consumers,” said SPE’s chairman of Global Television Studios and SPE Corporate Development Ravi Ahuja. “I especially want to thank N P Singh, who presented us with the idea to explore this merger well over a year ago.”
SPNI MD and CEO N P Singh said the merger will create a company that will redefine the contours of the media and entertainment industry. “As a representative of SPE on the Board of the new merged company, it will be my endeavour to provide strategic guidance and support to the company’s operating team in achieving our vision,” he added.
