Zee Entertainment has taken a significant step in the ongoing saga of its $10 billion merger with Sony’s Indian unit. Despite a setback at the Singapore International Arbitration Centre (SIAC) on February 4, where Sony’s emergency petition was rejected, Zee is now free to seek enforcement through an Indian tribunal.
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Sony’s Termination and Zee Entertainment’s Response
Sony terminated the merger on January 22, alleging breaches of contract and thereby bringing an end to a deal that could have resulted in one of India’s largest TV broadcasters. Zee vehemently denies these claims and is now turning to an Indian tribunal to compel Sony to fulfill its obligations and complete the merger.
SIAC’s Jurisdiction and Sony’s Disappointment
According to Zee’s filings with Indian stock exchanges, the SIAC asserted its lack of jurisdiction to prevent Zee from approaching the Indian tribunal. The SIAC stated that the merger fell within the purview of the National Company Law Tribunal of India. Sony expressed disappointment, emphasizing that the decision was procedural and focused solely on whether Zee could proceed with its application to the company law tribunal.
Sony’s Resolution and Commitment
Despite the setback, Sony remains resolute in its commitment to arbitrate the matter vigorously in Singapore before a full SIAC tribunal. Sony is determined to uphold Sony India’s right to terminate the merger agreement and pursue remedies, including a termination fee. In a statement, Sony expressed confidence in the merits of its position in both Singapore and India.
Background and Challenges of the Proposed Merger
The proposed Zee-Sony merger, in progress for two years, aimed to create a formidable Indian TV entity boasting over 90 channels spanning sports, entertainment, and news. Sony’s termination of the merger cited alleged non-compliance by Zee with certain financial terms, disputes over disposal of Russian assets, and issues related to a $1.4 billion Disney cricket rights deal, as reported by Reuters last week.