Zee Entertainment Enterprises Limited (ZEEL) said in an exchange filing today on September 18 that it will challenge the claim of Disney-owned Star India and secure its rights. Star India has filed a case against Zee for damages of $ 940 million (about Rs 8 thousand crores).
Now Zee Entertainment has called these claims of Star India baseless. Talking about the shares, the shares of Zee Entertainment closed today at Rs 131.25 with a decline of 1.35%. Intra-day it had fallen to the price of Rs 131.00. About two years ago on 26 August 2022, an agreement was signed between Star and Zee regarding the license of ICC TV rights for Men's and Under-19 (U-19) global events. This agreement was till the year 2027.
Zee had demanded Rs 69 crore back from Star India However, when talks regarding the merger of Zee Entertainment and Sony Pictures Networks India went awry, Zee backed out of this deal as well. Zee told Star India that it cannot go ahead with the agreement and demanded its Rs 69 crore back. On March 14, Star filed a case against Zee in LCTA (London Court of International Arbitration).
The stock of Zee Entertainment was at Rs 299.50 on 12 December 2024 last year, which is a one-year record high for its stock. From this level, it fell by about 58% in 7 months to Rs 126.15 on 4 June 2024, which is a one-year low for its shares. It has recovered about 4% from this low level so far, but it is still 56% downside from one-year high. The market cap of the company is Rs 12.61 thousand crore.
Merger termination dispute resolved, agreement reached between the two companies Last month in August, Zee had said that it had entered into an agreement to settle all disputes with Sony Pictures Networks India over the termination of the merger. The media firm had said in the statement, “In the agreement, Zee and Sony have agreed to withdraw all related claims against each other in the ongoing arbitration at the Singapore International Arbitration Centre (SIAC) and all related legal proceedings initiated at the National Company Law Tribunal (NCLT) and other forums.”
Resolving disputes through agreement and reaching non-cash settlement Both companies had said that under the terms of the agreement, neither party will have any outstanding or continuing obligation or liability to the other. The merger corporations have reached a non-cash settlement resolving all disputes relating to the agreement.
According to the statement of both the companies, 'This agreement has been reached with mutual understanding between the companies so that they can independently work on future growth opportunities with a new purpose. Also, they can focus on their media and entertainment business, which represents a conclusive conclusion of all disputes.'
On May 23, ZEE had demanded ₹750 crore termination fee from Sony Earlier on May 23, Zee Entertainment had asked Sony Group's Culver Max Entertainment and Bangla Entertainment Private Limited (BEPL) to pay $90 million as part of the termination fees. Zee Entertainment gave this information in a stock exchange filing.
Zee Entertainment had said in the filing, “Sony Group's India media unit Culver Max and BEPL have failed to comply with their obligations under the Merger Corporation Agreement (MCA). Therefore, the company has terminated the MCA and has asked Culver Max and BEPL to pay the termination fee, i.e., an aggregate amount equivalent to $90 million (Rs 750 crore), in accordance with the MCA.”
Sony announced the end of the deal on January 22 More than two years after announcing its proposed merger, Sony announced the termination of the deal on January 22. Sony also accused ZEEL of not fulfilling the closing conditions even after extending the closing period by a month. However, ZEEL says it is ready to fulfill most of the conditions.
The Mumbai bench of NCLT had approved the scheme of merger of ZEEL with Sony Group entities Culver Max Entertainment and BEPL on August 10, 2023. After completion of this deal, a media unit worth $ 10 billion (Rs 83,277 crore) could be formed.
Zee had spent Rs 432 crore on the merger deal According to regulatory filings, Zee Entertainment had spent Rs 432 crore in merger-related costs during 2023-24 and 2022-23 on its failed merger deal with Sony Group Corporation's India media unit Culver Max Entertainment.
Sony Group Corporation had said that ZEEL failed to fulfill the merger conditions and also initiated arbitration proceedings before the Singapore International Arbitration Centre (SIAC), claiming $90 million as termination fees.
Graphics Source: VaskarAssets
