Sony Pictures was 'pre-determined' to cancel the merger agreement with Zee Entertainment Enterprises Ltd, Zee claims in a suit filed with the National Company Law Tribunal (NCLT). It has been reported that to facilitate a smooth sale, ZEE suggested extending the deadline for completion by six months during the 30 days for discussion.
"The company was also willing to discuss any other alternate closing timeline that Sony believed would be reasonable and achievable," said Zee, which has sought the NCLT for the implementation of its merger. The truth, as it is now known, is that Sony had already planned to end the merger arrangement. In addition to rejecting ZEE's request, it failed to offer a counterproposal for an extension and instead began accusing ZEE of multiple unfounded violations and non-compliance, as stated in ZEE's appeal.
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Sony -Zee Merger dispute
The disagreement started when Sony Pictures (Culver Max) decided to scrap their planned $10 billion merger with Zee. Sony said in its termination letter dated January 22 that it was forced to call off the merger because the Conditions Precedent (CPs) had not been fulfilled. On August 10th of last year, the NCLT granted the two parties approval for the proposed merger.
At the stroke of midnight, a notification of an arbitration process before the Singapore International Arbitration Centre was also despatched, shortly after the termination letter. Sony sought a termination payment of $90 million from the Indian entertainment behemoth in its arbitration action before the SIAC, citing Zee's purported violations of the merger agreement.
The petition further claimed that, following the terms of the merger agreement, both businesses had to apply to the Ministry of Information and Broadcasting (MIB) to get permission to transfer ZEE's television channel up- and down-linking licenses to the combined company.
In addition to the other requirements, Punit Goenka's nomination as the managing director and chief executive officer of the combined firm required procedural permission from the Ministry of Home Affairs and consent from the Ministry of Information and Broadcasting. Sony, however, disregarded this.
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