ZEE Entertainment: Shares fell by 30% due to the news of cancellation of merger with Sony, BSE exchange took a big decision.
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ZEE Entertainment Share Price: Zee Entertainment’s troubles are showing no sign of abating. On one hand, Sony has canceled the merger with Zee. At the same time, after this news, there has been a lower circuit in the company’s shares. Shares of Zee Entertainment have fallen by around 30 percent today at 12 noon. At the same time, at 12.30 the company’s shares were trading at 169.75 with a loss of 26.64 percent i.e. Rs 61.65. Meanwhile, Bombay Stock Exchange (BSE) has increased the dynamic price band of Zee Entertainment shares from 10 to 15 percent. In the notice issued by the exchange, it has been said that if further discount is required then it will be done at an interval of 15 minutes. Zee Entertainment has informed the exchange that Sony has demanded a termination fee of $ 90 million in exchange for the cancellation of the deal. This is the biggest fall in the company’s shares since January 2019. G has said in his statement that he has not violated the terms of the agreement with Sony. However, they are exploring every option to deal with the situation.
Why did Sony cancel the deal with Zee?
Sony cited incomplete terms as the reason for canceling the deal. According to the report, the merger is due to a standoff between the companies over the leadership of the property. The case specifically involves Zee CEO Punit Goenka, who is being investigated by capital markets regulator SEBI. The merger of the two companies was aimed at creating a $10 billion media powerhouse capable of competing with global giants like Netflix Inc and Amazon.com Inc.
Agreement on merger plan was reached in 2021
The agreement for the merger between Sony and ZEEL was signed in December 2021. Sony will indirectly hold the maximum stake of 50.86 percent in the newly formed giant media house. Whereas, Zee’s founders will hold 3.99 percent stake in the company. At the same time, Zee shareholders will hold 45.15 percent stake. It was expected to take 8 to 10 months to complete the merger process of both the companies in 2021. However, due to various reasons the merger could not be completed within the stipulated time. The reason for this is that many banks and financial institutions that had given loans to JI filed a petition against this merger.
How one company merges with another company
For a company to acquire another company (merger and acquisition), the two companies first negotiate. The boards of directors of both companies agree to an agreement to plan the acquisition. In this, details of acquisition, time limit, valuation of property, stock currency etc. are adjusted. Once the plan is made and agreed upon, Naubat (Form 23C and Form 1 Naubat) is issued. This includes the process and details of the acquisition. After issuing Naubat, it is presented to the Supreme Court or the Naubat Approval Officer. After receiving the approval, implementation of the acquisition is started as per the plan. In this, one company acquires control of the property, stock, and assets of another company. Following the acquisition, the various process, production, finance, and management systems of both companies are integrated. The various divided structures are transformed into a consolidated and organized structure.
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