Zee Entertainment opened a new tab on Wednesday calling on Sony (6758.T), opened a new tab to honour its obligations to close a $10 billion merger deal between the companies and asked an Indian tribunal to order Sony to complete the combination that the Japanese firm terminated.
Sony terminated merger plans with Zee on Monday after more than two years of negotiations, seeking $90 million in termination fees from the Indian broadcaster for alleged breaches of terms of the agreement.
The Japanese company said certain “closing conditions” for the merger were not satisfied despite “good faith discussions” with Zee, and the companies had been unable to agree on an extension by their Jan. 21 deadline.
Zee, in a regulatory filing, denied Sony’s claims that it breached its obligations under the deal and said it has started legal action to contest the claims in arbitration proceedings before the Singapore International Arbitration Centre.
“The company has called upon to immediately withdraw the termination and confirm that they will perform their obligations to give effect to and implement the merger scheme,” Zee said.
Sony declined to comment on the Zee statement.
The collapse of the deal was particularly concerning for Zee as competition heats up, with Disney and billionaire Mukesh Ambani’s Reliance in talks to merge their Indian media assets.
Sony and Zee did not elaborate on which merger conditions had been unfulfilled. However, the firms had been at odds over Zee’s proposal for its CEO Punit Goenka to lead the combined company, after Goenka became the subject of an investigation by India’s market regulator.
Goenka, who was in India’s Ayodhya city on Monday to attend the grand opening of a Lord Ram temple, had written on X that he sees the collapse of the Sony deal as “a sign from the Lord” and that he would move forward by strengthening his company for stakeholders.
Zee said on Wednesday it has approached India’s National Company Law Tribunal (NCLT), which handles corporate disputes, seeking directions to implement the merger.
“This action does not come as a surprise, but there are no substantive reasons for the NCLT to rule in favour of Zee and force a merger,” Shriram Subramanian, founder and MD of corporate governance advisory firm InGovern Research Services, said.
Zee’s shares tumbled nearly 34% on Tuesday on worries the company would fail to thrive amid increasing competition. The stock recouped some losses on Wednesday, closing 6.8% higher ahead of its filing to exchanges. Reuters