Sony moves Singapore court against Zee for breaching merger pact: Report

Days after calling off the $10 billion merger with Zee Entertainment, Japanese media giant Sony has moved a Singapore court against the Indian company, alleging a breach of the merger pact, according to a report by the Times of India (ToI).

It added that Zee is likely to counter Sony’s claims in the Singapore International Arbitration Centre. This would include Sony’s demand for a $90 million termination fee from Zee.

Earlier this week, Sony scrapped plans for a $10 billion merger, stating that certain “closing conditions” to the merger were not satisfied despite “good faith discussions” with Zee, and the companies had been unable to agree upon an extension by their January 21 deadline.

“After more than two years of negotiations, we are extremely disappointed…We remain committed to growing our presence in this vibrant and fast-growing market,” the statement.

Later, Zee issued a statement denying all the claims and said it would take appropriate legal action.

Neither of the companies clearly mentioned which conditions of the merger were not met, but there had been a stalemate over who would lead the merged entity.

Zee had proposed Punit Goenka’s name, but Sony was concerned since he became subject to regulatory investigation in India.

In a statement, Zee said that Punit Goenka, managing director and chief executive officer of Zee, was “agreeable to step down in the interest of the merger”.

“Punit Goenka, MD & CEO of ZEEL, was agreeable to step down in the interest of the merger and proposals in this regard were discussed, including for appointment of a director on the board of the merged company, protections for the conduct of pending investigations and legal proceedings in the best interest of ZEEL’s directors and shareholders and the consequent modifications to the scheme to incorporate the same,” it said.

“ZEEL proposed an extension of a maximum period of six months for the consummation of the transaction, however, Culver Max did not provide any counter-proposal for extension. These discussions did not result in any proposal from Sony but they rather have chosen to terminate.”

According to the ToI report, Zee also has the option to move against Sony in Indian courts.

On Wednesday, Zee’s shares were up over 2 per cent on BSE after falling 30 per cent on January 23.