The National Company Law Tribunal (NCLT) has granted permission to Zee Entertainment Enterprises (ZEEL) to withdraw its application requesting Sony Group Corp-owned Culver Max Entertainment and Bangla Entertainment to implement their composite scheme of arrangement, according to media reports.
On January 22, 2024, Sony cancelled a $10 billion merger between its India unit and ZEEL after two years of negotiations and a deadlock over the leadership of the combined entity. ZEEL filed an implementation application after Culver Max and Bangla Entertainment terminated the merger agreement on January 22, alleging a breach of the merger cooperation agreement (MCA). Subsequently, Culver Max and Bangla Entertainment filed applications with the NCLT challenging the validity of ZEEL’s application.
On April 16, ZEEL announced its withdrawal of the merger implementation application filed against Sony before the NCLT, Mumbai bench. The Board made this decision after obtaining legal advice. In a statement, Zee stated, “This decision will also enable the Company to pursue growth and evaluate strategic opportunities to generate higher value for all shareholders. The Board remains committed towards reviewing the strategic action-oriented steps taken by the management and providing timely guidance.”
Zee filed the implementation application on January 24, seeking directions for the Composite Scheme of Arrangement involving ZEE, Culver Max Entertainment and Bangla Entertainment. Withdrawal of this application allows the company to focus on aggressively pursuing its claims against Sony in ongoing arbitration proceedings at the Singapore International Arbitration Centre (SIAC) and other venues, Zee added.
R. Gopalan, Chairman, ZEE had said at the time, “The immediate priority for the Company is to focus on performance and achieve its targeted goals for the future. We have reviewed the key steps taken by the management over the last few months that are result-oriented, and we believe that the Company is well poised to chart a stronger growth trajectory. Hence, after seeking an independent legal opinion, the Board has advised the management of the Company to withdraw the implementation application filed before the NCLT."
During the May 17 earnings call, ZEEL MD and CEO Punit Goenka said, "As you would have read in our communication issued in April 2024, the Company has withdrawn its merger implementation application from the National Company Law Tribunal (NCLT). This decision will enable the Company to sharply focus on growth and strategic opportunities, in order to generate higher value for all shareholders."
He added, “That said, the Company will continue to aggressively pursue the arbitration proceedings at the Singapore International Arbitration Centre (SIAC) and in other forums.”
In a regulatory filing on May 23, Zee revealed the termination of the merger cooperation agreement (MCA) and requested a $90 million termination fee from Culver Max Entertainment, owned by the Sony group and its entity Bangla Entertainment (BEPL) for non-compliance with MCA obligations.
"Culver Max and BEPL have failed to comply with their obligations under the Merger Cooperation Agreement (MCA). Therefore, the Company has terminated the MCA and called upon Culver Max and BEPL to pay the termination fee i.e. the aggregate amount equal to USD 90,000,000, in accordance with the MCA," said Zee in an exchange filing.
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