Sony Zee Deal terminated ending $10 Sony’s billion merger with Zee Entertainment Enterprises Ltd., ending a two-year-long acquisition saga.

Sony Group Corp. has officially confirmed the termination of its $10 billion merger with Zee Entertainment Enterprises Ltd., ending a two-year-long acquisition saga.


The decision, announced on Monday, comes as the conditions necessary for the merger were unmet, marking a significant development in the Indian media landscape and leaving Zee vulnerable to increased competition.

The Sony Zee deal termination follows a prolonged stalemate between the two companies, primarily revolving around the leadership of the merged entity.


The critical point of contention was whether Zee’s Chief Executive Officer, Punit Goenka, would lead the new entity.


The backdrop to this dispute included an investigation into Goenka’s conduct by India’s capital markets regulator, adding complexity to the negotiation process. The failure to resolve this leadership dispute ultimately led to the deal’s abandonment.


The proposed merger aimed to create a $10 billion media giant, providing a formidable contender against global streaming powerhouses like Netflix Inc. and Inc.


However, the termination of the deal leaves Zee in a precarious position, especially considering the financial challenges it has been facing. Zee reported a 95% drop in profit for the fiscal year ending March 31, totalling 478 million rupees ($5.8 million).


Sony’s decision to send a termination letter to Zee comes after a 30-day grace period, during which the two parties could not agree on the leadership dispute. As of late last week, Zee expressed that they were still in talks to salvage the merger.


The leadership hurdle emerged as the most significant obstacle to the deal, with Zee insisting that Punit Goenka would lead the new entity, as per the agreement reached in 2021.


However, Sony hesitated to endorse Goenka’s appointment, given the ongoing regulatory investigation against him.


The Securities and Exchange Board of India (SEBI) had alleged in June that Zee had engaged in fraudulent practices related to the recovery of loans, covering private financing deals by its founder, Subhash Chandra. SEBI’s interim order accused Goenka and his father of abusing their positions and diverting funds, leading to a bar on Goenka from executive or director appointments in listed companies.


Despite a reprieve from an appellate authority against the SEBI order, Sony viewed the regulatory probe as a significant corporate governance concern.


Despite receiving almost all regulatory approvals, the collapsed merger would have resulted in Sony owning a 50.86% stake, with Goenka’s family holding 3.99%.


With the deal off the table, Sony now faces the challenge of revising its media plans for India, the world’s most populous country. The company had anticipated benefiting from Zee’s extensive content library in regional Indian languages and its array of local television channels.


In the aftermath of the terminated deal, Zee grapples with financial vulnerability and investor concerns and faces intensified competition from stronger rivals.


Reliance Industries Ltd. and Walt Disney Co. continue their talks to merge their respective India media operations, further complicating Zee’s position in the dynamic Indian media landscape.