Zee Entertainment shares in early trade on September 22, 2021 were locked in 20 percent upper circuit at Rs. 306.8 per share. The surge in the stock price of the media and entertainment comes on the backdrop of its board providing an in-principal approval to the merger of Sony Pictures Networks India (SPNI) & Zee Entertainment.
The board has not just paid heed to the financial aspect of the deal, but also considers the value addition that the transaction will bring to the table.In the BSE filing, the company said its board has approved the execution of a non-binding termsheet with Sony Pictures and also highlighted the various terms.
"The indicative initial merger ratio is expected to result in the shareholders of the Company holding approximately 47.07 % in the merged company and the promoters of Sony India holding approximately 52.93 % in the merged company (post infusion of growth capital into Sony India as part of the merger such that Sony India has a cash balance of approximately USD $1.575B). This will be subject to completion of satisfactory due diligence by the Company and Sony India, an independent valuation exercise to be conducted by valuers, subject to a fairn ess opinion to be provided by a merchant banker to the Company and negotiation, finalization and execution of definitive agreements", added the release.
Also, Sony India promoters will have a say in appointing major directors for the merged company. Moreover Punit Goenka will provide services to the merged company as he currently provides.