BUSINESS

Zee sues Sony in the National Company Law Tribunal and challenges Sony’s $90 million claim in a Singaporean court

MUMBAI: Sony has been urged to “immediately” retract its notice of merger termination and fulfill its commitments to carry out the agreement between the two companies by Zee Entertainment, which is run by Punit Goenka. Additionally, it has requested that Sony be ordered to complete the $10 billion merger that the Japanese behemoth abandoned after more than two years of talks by the National Company Law Tribunal (NCLT-Mumbai).

Moreover, the Indian business refuted Sony’s allegations before the Singapore International Arbitration Centre that it had violated the terms of the merger agreement. Due to Zee’s inability to comply with the merger terms, Sony has petitioned the Singapore tribunal for termination fees in the amount of $90 million.
In a regulatory filing, Zee argued that Sony’s demand for a termination fee is unfeasible legally and refuted Sony’s right to cancel the merger deal. It claimed that Sony is not fulfilling its responsibilities to carry out and give effect to the merger, which the NCLT had allowed. It is “seeking directions to implement the merger” from the NCLT, per its strategy. “This action is not surprising, but there are no good reasons for the NCLT to rule in Zee’s favor and force a merger,” Shriram Subramanian, the founder of InGovern Research Services, was cited by Reuters as saying.
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According to sources, Zee and Sony failed to meet 22 merger requirements both separately and collectively. On who would lead the combined company, however, the two were at odds. Sony was against Geonka leading the merged business when Sebi opened a regulatory investigation on him.
Subhash Chandra, the father of Goenka and the creator of Zee, accused the market regulator of attempting to thwart the merger. Six days before Sony canceled the merger, Chandra wrote to Finance Minister Nirmala Sitharaman, saying: “While Zee and the people have been cooperating with Sebi on its investigation related to alleged fund diversion by promoters, the timing of a new notice issued by the regulator to former directors, matching with the deadline of the merger, raises concern.”
He emphasized that there aren’t even any new points in the notification. “I’m not suggesting that Sebi should not investigate if they have doubts of any kind… issuing a notice at this stage appears to be an exercise to sensationalise the matter.” Chandra added: “If the mentioned parties continue to influence the investigations, especially by Sebi, it will lead to a huge financial loss for the company’s minority shareholders.”
In a related development, Sony said in a Wednesday internal email to staff members that it would keep looking for ways to grow its footprint in India, including M&As.

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