ZEE (Zee Entertainment Enterprises) on Wednesday declared yesterday, that its board of directors unanimously gave in-principle approval for the merger with SPNI (Sony Pictures Network India). Post this public announcement, shares of ZEE surged more than 20% on the Bombay Stock of Exchange (BSE).
While many news articles making this merger a complicated one, this is our attempt to make this ‘breaking news’ less tricky with most of the information intact.
1. The LEADER of the merger…
Punit Goenka will continue to be the Managing Director as well as the CEO of the merged entity.
2. The MAJORITY STAKE in the merger…
The shareholders of SPNI (Sony Pictures Network Network India) will clasp the majority of the stakes in the merged entity. They will also be required for injecting growth capital into SPNI such that SPNI has approximately $1.575 billion at closing. This amount will be used for further growth opportunities.
3. The RATIO of ZEE and SPNI…
Based on the existing anticipated equity values of SPNI and ZEE, the merger ratio is in the favour of ZEE with 61.25%. However, once the shareholders are done with infusing the amount for growth capital into the merged entity (as mention in the second point), the resultant merger ratio is anticipated to be 47:53 (ZEE: SPNI).
4. The DEAL is about…
Both the companies have decided to integrate linear networks, production operations, program libraries, and digital assets. Furthermore, the promoters of ZEE and SPNI will agree upon non-compete arrangements with due course of time.
5.The NATURE of the merged entity…
The merged entity will be a public listed company as both the entities are entering into an exclusive non-binding term sheet. The non-binding term sheet envisages an “exclusive negotiation period of 90 days”.
It means that during the period of 90 days, ZEE and SPNI will conduct mutual diligence and negotiate definitive binding agreements.
6. The BOARD OF DIRECTORS…
SPNI will nominate the board of directors of the merged entity.
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With this announcement, the stock prices of these entities are ready to experience some highs and lows. Stay tuned to CuriousKeeda for more updates on this merger.
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