Sony pulls out of Zee merger and claims US$90m termination fee

Sony has called off its US$10 billion merger with Zee Entertainment amid concern about the Indian media giant’s financial performance and a refusal to countenance existing Zee CEO Punit Goenka staying on after the merger.

Source: Zee Entertainment

Sony’s Indian subsidiary sent a termination letter to Zee over the weekend, stating that the closing conditions of the merger had not been satisfied by the end date agreed at the time of the pair’s initial agreement.

Sony said it did “not anticipate any material impact on its consolidated financial results as a result of the termination of the definitive agreements for the merger”.

Sony is seeking a termination fee of US$90 million, alleging breaches of the merger cooperation agreement by Zee.

The Indian company said it “categorically refutes all claims and assertions” made by Sony’s subsidiaries “including their claims for the termination fee, and reserves all its rights in this matter”.

Ze said it would “take all necessary steps to safeguard the long-term interests of its stakeholders, including by taking appropriate legal action”.

The company maintains that had consistently worked towards implementing the agreement and had engaged in talks to look at extending the completion timeline.

The merger had been plagued by delays and problems, including a regulatory investigation into allegations that Goenka and his father and founder of the company, Subhash Chandra, had attempted to divert funds from the company, which the pair deny.

Goenka, who was in Ayodhya for the controversial inauguration of a Hindu temple by Indian prime minster Narendra Modi on the site of a 16^th century mosque razed by mobs in 1992, responded on X to the collapse of the merger by claiming it be a ‘sign from the Lord’ and said he would move forward to strengthen the company on its own.

“As I arrived at Ayodhya early this morning for the auspicious occasion of Pran Pratishtha, I received a message that the deal that I have spent 2 years envisioning and working towards had fallen through, despite my best and most honest efforts. I believe this to be a sign from the Lord. I resolve to move ahead positively and work towards strengthening Bharat’s pioneering M&E Company, for all its stakeholders,” the CEO wrote.