Sony scraps $10 billion India operations merger with Zee Entertainment |
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Last week, Sony scrapped its plans for a $10 billion merger of its Indian unit with Zee Entertainment. At that time, Sony said in a statement that certain “closing conditions” to the merger were not satisfied. A new report has said that the Japanese company abandoned the proposed merger because Zee failed to meet financial terms and address concerns.
Citing a termination notice, news agency Reuters reported that Sony alleged that Zee Entertainment “failed to take commercially reasonable” efforts to fulfil certain financial requirements outlined in the agreement, including with regards to cash availability, while a “lack of commercial prudence” by the Indian network contributed to its decision.
In the 62-page notice, Sony said several breaches of the merger agreement were “not remediable and any further attempts to mutually discuss would be an empty formality, especially given … plain denial (by Zee) and failure to provide a proposal to protect” Sony’s interests.
“The breaches committed by Zee are not ‘procedural or technical’ in nature and will have a substantive impact on the transactions,” Sony was quoted as saying.
In a statement on January 22, Sony announced the termination of the merger, stating that the “closing conditions” were not met after two years of negotiations.
What Zee Entertainment has to say
In response, Zee denied the allegations in a letter to Sony, also reviewed by Reuters, accusing the Japanese company of acting in “bad faith” by calling off the merger. Zee labelled Sony’s demand for a $90 million termination fee as “legally untenable.”
The proposed merger between Zee and Sony in India aimed to create a media giant with over 90 channels covering sports, entertainment and news.
Zee was “unable to realistically assess the timeline required to resolve all the outstanding issues,” Sony’s termination notice noted.
Citing a termination notice, news agency Reuters reported that Sony alleged that Zee Entertainment “failed to take commercially reasonable” efforts to fulfil certain financial requirements outlined in the agreement, including with regards to cash availability, while a “lack of commercial prudence” by the Indian network contributed to its decision.
In the 62-page notice, Sony said several breaches of the merger agreement were “not remediable and any further attempts to mutually discuss would be an empty formality, especially given … plain denial (by Zee) and failure to provide a proposal to protect” Sony’s interests.
“The breaches committed by Zee are not ‘procedural or technical’ in nature and will have a substantive impact on the transactions,” Sony was quoted as saying.
In a statement on January 22, Sony announced the termination of the merger, stating that the “closing conditions” were not met after two years of negotiations.
What Zee Entertainment has to say
In response, Zee denied the allegations in a letter to Sony, also reviewed by Reuters, accusing the Japanese company of acting in “bad faith” by calling off the merger. Zee labelled Sony’s demand for a $90 million termination fee as “legally untenable.”
The proposed merger between Zee and Sony in India aimed to create a media giant with over 90 channels covering sports, entertainment and news.
Zee was “unable to realistically assess the timeline required to resolve all the outstanding issues,” Sony’s termination notice noted.
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