Zee Entertainment shares surge 25% on announcement of merger cope with Sony Pictures India

Shares of Zee Entertainment Enterprises (ZEEL) surged to a 25 per cent higher circuit throughout the intraday commerce on Wednesday and hit a 52-week excessive on the BSE and National Stock Exchange (NSE) after the corporate introduced that its board has agreed to a merger with Sony Pictures Networks India (SPNI).
The scrip surged 24.98 per cent to a 52-week excessive of Rs 319.50 on the BSE, whereas on NSE it rallied 24.99 per cent to Rs 319.60, its 52-week excessive.
At 12:07 pm, the inventory was buying and selling at Rs 309.90 apiece, up Rs 54.25 (21.22 per cent) on the BSE, whereas it was at Rs 310.75 on the NSE, up Rs 55.05 (21.53 per cent).
Over 29.62 lakh shares have been traded to this point on the BSE whereas over 7.49 crore shares exchanged palms on the NSE, knowledge from the respective inventory exchanges confirmed.
Both ZEEL and SPNI earlier within the day stated they’ve obtained in-principle approval for a merger that may mix each corporations’ linear networks, digital property, manufacturing operations and program libraries.
“The shareholders of SPNI, will hold a majority stake in the merged entity. The shareholders of SPNI will also infuse growth capital into SPNI as part of the merger such that SPNI has approximately $1.575 billion at closing, for use in pursuing other growth opportunities,” ZEEL knowledgeable in a submitting to the inventory exchanges.
With the proposed infusion of development capital into SPNI, the resultant merger ratio is predicted to lead to 47.07 per cent of the merged entity to be held by ZEEL shareholders and the stability 52.93 per cent of the merged entity to be held by SPNI shareholders, the assertion stated.
Additionally, the assertion knowledgeable that that ZEEL MD and CEO Punit Goenka, who’s going through stress from two largest shareholders of the corporate – Invesco and OFI Global China Fund LLC – to give up the publish, would proceed to guide the merged entity.
Further, sure non-compete preparations might be agreed upon between the promoters of ZEEL and the promoters of SPNI. According to the time period sheet, the promoter household is free to extend its shareholding from the present – 4 per cent to as much as 20 per cent, in a way that’s in accordance with relevant regulation. Majority of the Board of Directors of the merged entity might be nominated by Sony Group.
“Sony is strong in the Hindi GEC segment (especially in non-fiction space) where Zee is weak. Zee is strong in movies (across genres) and regional GEC space. Zee has ~18 per cent network viewership share and Sony should be ~10-12 per cent in our view. Additionally Sony is strong in Sports as well. Thus it would be a good strategic fit from broadcast, digital and content perspective,” stated Ashwin Patil, Sr. Research Analyst (media) at LKP Securities.