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The Competition Commission of India (CCI) has given its approval for the pending merger of Zee Entertainment and Sony Pictures Network India Ltd. while imposing certain conditions on the merger.
The deal had faced several troubles ever since it was announced in December last year. The CCI had expressed concern that the merger of Zee and Sony, two of the largest players in the market, would give the merged entity unprecedented pricing power, which would be detrimental to the customers and the broadcasting industry as a whole.
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However, both companies were willing to shut down a few major channels to allow the deal to proceed.
The transaction includes the amalgamation of Zee Entertainment and Bangla Entertainment Pvt. Ltd. into Culver Max Entertainment Pvt. Ltd. As part of the transaction, there will be preferential allotment of certain shares by Culver Max to Sunbright International Holdings Limited (earlier known as Essel Holdings Limited) and Sunbright Mauritius Investments Limited.
As part of the modification to the transaction, Zee Entertainment has left out a major entertainment channel from the deal in a bid to alleviate the CCI's concerns.
“We are delighted to receive CCI approvals to merge ZEEL into SPN. We will now await the remaining regulatory approvals to finally launch the newly merged company. The merged company will create extraordinary value for Indian consumers and eventually lead the consumer transition from traditional pay TV into the digital future," SPN said in a statement.
Zee Entertainment said that the CCI has "granted the approval in phase-1 after evaluating the official legal and economic submissions made by the company. Considering the immense value that the proposed merger will generate for all its stakeholders, the company has offered the necessary remedies in accordance with the regulator’s guidelines. The detailed order is awaited,"
The stock of Zee Entertainment jumped over 6% to touch a high of Rs 271.50 per share before closing at Rs 268.20 per share on Tuesday.
Article by Aman Agarwal.
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