Shares of India’s Zee Entertainment fell 10% in early trade on Tuesday, a day after Bloomberg reported that Japan’s Sony was planning to scrap the $10 billion merger of its India unit with the broadcaster.
The story, citing sources, said that Sony is looking to cancel the deal over a standoff on whether Punit Goenka will continue to lead the merged entity. It further said that Sony does not want Goenka as CEO amid a regulatory probe. Sony plans on sending the termination notice by January 20, the report said.
However, News18.com has no independent confirmation of the news report.
In August 2023, market regulator SEBI had barred both Subhash Chandra and Punit Goenka from holding key managerial positions at Zee Entertainment till they completed their probe over the next eight months.
However, the Securities Appellate Tribunal (SAT) overturned SEBI’s ban, which led to Punit Goenka returning as MD & CEO of Zee Entertainment on October 30, 2023.
In an interaction with CNBC-TV18, Elara Capital’s Karan Taurani said that it is too early to assume that the deal will be called off.
He further said that there is low likelihood of Punit Goenka putting the merger at risk and that once should wait for more clarity on the same.
Shares of Zee Entertainment are trading 10% lower at ₹251.95. The stock has remained in the ₹180 – ₹300 range over the last 12 months as uncertainty over the merger continued to linger over various issues.
Earlier this morning, 1.35 crore shares of Zee Entertainment or 1.4% equity of the company worth ₹340.1 crore, exchanged hands in multiple block deals. Buyers and sellers in the transaction remain unclear.
Additionally, shares of Zee Entertainment are also in the F&O ban list today, which means that no new positions can be created in the stock. This is the lowest level for the stock since December 22. With today’s drop, the company’s market capitalisation has slipped below the ₹25,000 crore mark.
The stock of the broadcasting company has gained just 6 per cent in the past six months against a 10 per cent rise in the Nifty Media index, as uncertainty plagues the deal.
On January 8, the stock closed at Rs 278.45 on the National Stock Exchange, down 1.63 per cent from the previous close.
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