ZEE Entertainment Enterprises Ltd on Tuesday said it has withdrawn its application, seeking implementation of the merger with Sony, filed before the National Company Law Tribunal Mumbai bench.
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The company filed an application with the NCLT on January 24, 2024, seeking directions on the implementation of a composite scheme of arrangement between ZEE Entertainment Enterprises Ltd (ZEEL) and Sony group firms Culver Max Entertainment Pvt Ltd and Bangla Entertainment Pvt Ltd.
Earlier on January 22, Sony Group Corp called off a $10 billion merger of its India unit with ZEEL, following a stalemate over who will lead the merged entity. The deal was announced more than two years back. Sony had sought USD 90 million as break-up fees for violating the terms of the merger pact and invoked arbitration.
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In a statement on Tuesday, ZEEL said the steps taken by it to withdraw the implementation application from NCLT are based on the legal advice received by the board.
"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 to reviewing the strategic action-oriented steps taken by the management and providing timely guidance," it added.
The company further said, "This decision to withdraw the implementation application will enable the company to continue to aggressively pursue all its claims against Sony in the ongoing arbitration proceedings at the Singapore International Arbitration Centre (SIAC) and in other forums".
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Sony has already withdrawn its merger application from the NCLT after filing arbitration before SIAC.
On the reasons behind the decision, ZEEL Chairman R. Gopalan said 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," he added.
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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, Gopalan said.
"The board remains focused towards maximising shareholder value, strengthening the company's claims in arbitration and enabling the company to explore strategic opportunities," he noted.
Recently, ZEEL management initiated a process of rationalisation of the workforce by 15 per cent to prune staff strength across the company while its MD and CEO Punit Goenka took a 20% cut in his remuneration.
The board had also instituted a Monthly Management Mentorship (3M) Program to regularly review and advise the management on critical business aspects.
"The concerted efforts being taken by the board and the management are aimed towards achieving robust growth to consistently generate higher value for shareholders," the statement said.