The board of directors of Zee Entertainment Limited (ZEL) has cleared the way for the company's merger with Sony Pictures Networks India (SPNI), in what will be one of India's largest deals in the media sector.
The combined entity will have estimated revenue of Rs 14,000 crores, making it India's 2nd largest media firm. (Can you guess the first?)
SPNI is the Indian media arm of the Japanese giant Sony Corp, which has a market cap of ~$82 billion (Rs 6 lakh crores).
And ZEL, as you may know. was founded by India's own media tycoon Subhash Chandra, and has a market cap of Rs 34k crores (~$5 billion)
After the merger, Sony will hold almost 51% stake in the combined entity, while the current shareholders of ZEL will hold 45%. Sony will also put in Rs 12,000 crore as investment into the new company. Much of this is expected to go to content (IPL rights, originals, films) and technology.
Interestingly, founder-promoter Subhash Chandra, who currently owns less than 1% of ZEL, will get a ~4% stake in the Sony+Zee combined entity. This (as reported earlier) is because in exchange he will sign an agreement that will prohibit him from starting a rival media company.
The current CEO of ZEL Punit Goenka (who is Subhash Chandra's son) will lead the merged company as well.
This seems like a happy ending for Subhash Chandra and co. because a couple of months ago they all were under quite a lot of pressure from shareholders like Invesco, who wanted the CEO to be removed. (Read more about that story here)