New Delhi: Shares of Zee Entertainment Enterprises tanked 10 per cent to hit the lower circuit in the Tuesday morning session, a day after the cancellation of the merger deal with Sony Pictures.
At 10.55 am, the shares were 9.98 per cent lower at Rs 208.30. So far in 2024, the shares declined 27 per cent. The lower circuit is the lower possible price that the stock of a firm can trade at on that particular session.
On Monday, Sony Pictures terminated the USD 10-billion merger deal with Zee Entertainment Enterprises.
In a notice issued to Zee, Sony called off the December 22, 2021 agreement to merge Zee Entertainment Enterprises (ZEEL) and Culver Max Entertainment Private Limited (CME), which was formerly known as Sony Pictures Networks India Private Limited.
Zee Entertainment Enterprises down 20% pic.twitter.com/EJFxKQbjFn
— ABDULMAJEED AL FAEA (@AJ_ALFAEA) January 23, 2024
Zee received communications from Culver Max Entertainment Pvt. Ltd. (formerly Sony Pictures Networks India) (“Culver Max”) and Bangla Entertainment Pvt. Ltd. (“BEPL”) on MOnday, purporting to terminate the Merger Co-operation Agreement dated December 2021, and seeking a termination fee worth USD 90 million on account of alleged breaches by ZEEL of the terms.
ZEEL categorically denies all the assertions raised by Culver Max and BEPL on the alleged breaches under the terms of the MCA, including their claims for the termination fee, Zee said in a release on Monday.
“ZEEL has consistently worked towards the implementation of the mentioned scheme in the interest of the shareholders. ZEEL also held several deliberations and good faith negotiations with Culver Max and BEPL, with a view to consider an extension of the merger completion timeline, that did not materialise,” Zee added in the release.
ZEEL’s Board of Directors is evaluating all the available options, it said, adding that it would take all the necessary steps to protect the long-term interests of all its stakeholders, including by taking appropriate legal action and contesting Culver Max and BEPL’s claims in the arbitration proceedings.
“We are evaluating the next steps and considering the appropriate course of action. The Board has noted that the Company took all the required steps in the course of its integration journey over the last two years, to ensure that the scheme is implemented at the earliest. That said, the Board would like to assure its stakeholders that the Company will take all the necessary actions, in the best interest of all stakeholders, including by taking appropriate legal action and contesting Culver Max and BEPL’s claims in the arbitration proceedings,” R Gopalan, Chairman, ZEE Entertainment Enterprises.
ZEEL inked the Merger Co-operation Agreement with Culver Max and BEPL on December 21, 2021, which was approved by the Mumbai bench of the National Company Law Tribunal (NCLT) on August 10 and 11, 2023, respectively
ZEEL exercised its right to require Culver Max and BEPL to enter into good faith negotiations for a period of 30 days to arrive at a mutual agreement on the extension of the end date by a reasonable period of time for completion of the transaction as per the terms of the MCA.