Zed Entertainment Enterprises Ltd. announced on Monday that it is thinking about suing Sony Group following the Japanese media giant's termination of the $10 billion merger agreement. Due to disagreements over certain terms of the agreement, Sony called off the merger, which had been announced two years earlier. Sony has also demanded termination payments from Zed totaling $90 million.
"Zed Entertainment Enterprises Ltd. (ZEEL) has received notice from Culver Max Entertainment (CME) that the deal to merge ZEEL with CME, which was signed on December 22, 2021, is ending. Despite our sincere attempts to reach a consensus on an extension prior to the January 21 deadline, we were unable to extend the end date as stipulated in the merger collaboration agreement. We are deeply saddened that the closing criteria for the merger were not met by the deadline, following almost two years of negotiations.
Sony said in a statement earlier on Monday, "We remain committed to growing our presence in this vibrant and fast-growing market and delivering world-class entertainment to Indian audiences."
In Mumbai on Saturday, Zed shares ended the trading day 1.5% down. As Monday is a public holiday in Maharashtra, the market is closed.
"The Board of Directors of ZEEK is considering every alternative. Zed will take all necessary actions to safeguard the long-term interests of all of its stakeholders in accordance with the Board's guidance, including pursuing appropriate legal action and refuting Culver Max and BEPL's claims in the arbitration proceedings," the company stated in a stock exchange filing.
"The Board of Directors has taken note of Sony's letters purporting to terminate the Merger Co-operation Agreement, on the Company's proposed merger with and into Culver Max Entertainment Pvt. Ltd, citing arbitration and seeking interim reliefs," stated Gopalan, Chairman of ZED Entertainment Enterprises Ltd. We are assessing what needs to happen next and deciding on the best course of action. The Board has observed that for the last two years, the Company has taken all necessary steps to ensure that the scheme is implemented as soon as possible.
Having stated that, the Board wants to reassure its stakeholders that the Company will do everything within its power to act in their best interests. This will include pursuing the proper legal action and defending BEPL's and Culver Max's claims in the arbitration process. The Board will continue to lead the team and has total faith in the Company's highly experienced senior management. We acknowledge and appreciate the faith that our stakeholders and shareholders have in us, and we thank them for their ongoing support. Even though Sony chose to end the agreement, Zee's MD Punit Goenka was "agreeable to step down in the interest of the merger."
The parties failed to reach a consensus on the alleged pending circumstances precedent that necessitated action on the part of both ZEEL and Culver Max, BEPL under the terms of the MCA, despite holding many deliberations in good faith. In the interest of the merger, Punit Goenka, MD and CEO of ZEEL, agreed to step down. Proposals were discussed in this regard, including the appointment of a director to the combined company's board and safeguards for handling ongoing legal proceedings and investigations in the best interests of ZEEL's directors and shareholders, as well as changes to the plan to incorporate the same. ZEEL suggested extending the transaction's completion date by a maximum of six months; Culver Max did not offer a counterproposal for an extension. Sony chose to end rather than make a proposal as a result of these negotiations, Zed added.
