New Delhi, 22 Jan 

Culver Max Entertainment, formerly known as Sony Pictures, on Monday terminated its proposed USD 10 billion merger agreement with Zee Entertainment while seeking USD 90 million for breach of conditions besides initiating arbitration, charges that the Indian firm has refuted. In a statement, Sony Group Corporation (SGC) said Zee Entertainment Enterprises Ltd (ZEEL) did not satisfy the merger conditions despite engaging in discussions to extend the end date for consummation of the transaction.

On December 22, 2021, Sony Pictures Networks India (SPNI) and ZEEL had entered into a definitive agreement to merge, with a two-year deadline. However, last December, the deadline was extended for a month as per the provisions of the agreement, after both companies failed to resolve their difference. The one-month extension ended on January 20, 2024 but both parties could not resolve their differences. The time frame was also not extended further.

The agreement provided that if the parties were unable to agree upon such an extension by the end of the discussion period, any party could terminate the agreement by providing a written notice. "SPNI, a wholly-owned subsidiary of Sony Group Corporation today issued a notice terminating the definitive agreements entered into by SPNI and ZEEL relating to the merger of ZEEL with and into SPNI," said a statement by the Japanese multinational.

Sony said the merger did not close by the end date as, among other things, and the closing conditions to the merger were not satisfied by the specified time. "As a result, on January 22, 2024, SPNI issued a notice to ZEEL terminating the definitive agreements," it said.

Meanwhile, in a separate statement, Sony said, “Although we engaged in good faith discussions to extend the end date under the merger cooperation agreement (MCA), we were unable to agree upon an extension by the January 21 deadline.”

Reacting to Sony’s move, ZEEL said it is evaluating all the available options which also include “taking appropriate legal action and contesting Culver Max and BEPL’s claims in the arbitration proceedings”. “The company categorically refutes all claims and assertions made by Culver Max and BEPL regarding alleged breaches of the MCA by ZEEL, including their claims for the termination fee, and reserves all its rights in this matter,” ZEEL said in a regulatory filing.

Culver Max is an indirect wholly-owned subsidiary of SGC. Bangla Entertainment Pvt Ltd (BEPL) is also an indirect wholly-owned subsidiary of SGC and a part of the SGC Group.

ZEEL said it has received a demand of termination fee of USD 90 million ( around Rs 748 crore) on account of “alleged breaches” and invoking arbitration. It denied all assertions raised by Culver Max and BEPL on the alleged breaches under the terms of the MCA, including their claims for the termination fee. “ZEEL’s Board of Directors is evaluating all the available options. Basis the guidance received from the Board, ZEEL will take all the necessary steps to protect the long-term interests of all its stakeholders, including by taking appropriate legal action and contesting Culver Max and BEPL’s claims in the arbitration proceedings. It further said ZEEL MD & CEO Punit Goenka had agreed to step down as the leader of the proposed merged entity and sought a six-month extension.

This was done 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, protection for 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. "ZEEL proposed an extension of a maximum period of six months for 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," it said.

It has displayed “utmost commitment” towards the merger by undertaking several permanent and irreversible steps, resulting in one time and recurring costs for the company, said ZEEL.