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    Zee-Sony merger: Agreement goes through, Punit Goenka to lead merged entity

    Zee-Sony merger: Agreement goes through, Punit Goenka to lead merged entity

    Zee-Sony merger: Agreement goes through, Punit Goenka to lead merged entity
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    By CNBCTV18.com  IST (Updated)

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    Zee Entertainment and Sony have merged to create India's second-largest entertainment network. The merged entity will be led by Punit Goenka and a majority of the board of directors of the combined company will be nominated by the Sony Group. Zee promoters have agreed to own not more than 20 percent of its outstanding shares and they have no pre-emptive or other rights to acquire equity in the merged entity.

    The board of directors of entertainment major Zee Entertainment Enterprises (ZEE) has approved the binding agreement with Sony Pictures Networks India (SPN), a subsidiary of Sony Pictures Entertainment a day after the 90-day exclusivity period of the non-binding bid ended Tuesday.
    Punit Goenka will lead the merged entity as the managing director and CEO of the company. The majority of the board of directors of the combined company will be nominated by the Sony Group and will include the current SPN Managing Director and CEO NP Singh. Singh will also assume a broader executive position at SPE as the Chairman of Sony Pictures India (a division of SPE). Singh will report to Ravi Ahuja, the chairman of Global Television Studios and SPE corporate.
    The two had announced a merger on September 22 and as a part of the deal. Sony will own 50.86 percent of the merged entity, while the promoter group Essel will own a 3.99 percent stake. The public shareholding will stand at 45.15 percent.
    Zee currently owns 96.05 crore shares, post-merger their holding will rise to 173.63 crores. The promoters are expected to get over Rs 1,000 crore from the non-compete. The promoters will buy over 3.67 shares in the merged entity at Rs 300 per share to maintain the 3.99 percent stake.
    As per the company's term sheet, SPE Mauritius Investments Limited will pay to Essel an aggregate amount of USD equivalent of over Rs 1,000 crore towards the non-compete obligations.
    Further, the promoters of Zee have agreed to own not more than 20 percent of its outstanding shares. The promoters or founders of Zee do not have any rights to acquire equity in the combined company from the Sony Group.
    SPE was advised on the this transaction by the likes of Morgan Stanley, KPMG, Shardul Amarchand Managaldas. Zee was advised by KPMG, JP Morgan, Trilegal, and Boston.
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