NCLT recalls approval of $10 billion deal after Zee-Sony terminate scheme

The Mumbai bench of the National Company Law Tribunal (NCLT) has recalled its order approving the $10 billion merger deal between Zee Entertainment (Zee) and Sony Pictures Networks India (Sony Pictures), PTI reported on September 14.

The bench recalled its order dated August 10, 2023, last week and observed that both parties have “mutually consented” to withdraw the scheme after reaching a settlement agreement. It added that the board of directors have also passed the resolutions to withdraw the scheme of amalgamation, the report said.

“Accordingly, this Bench allows the withdrawal of the Scheme of Amalgamation and hereby recalls order dated 10.08.2023 in C.P.(CAA) No. 209 of 2022,” said NCLT order, a copy of which was shared to bourses by Zee on Thursday (September 12).

As per the filing, Zee, which applied for withdrawal, submitted the Composite Scheme of the Merger Cooperation Agreement (MCA) executed to give effect to this scheme stands terminated, and accordingly, the closing date has not occurred, and the scheme has not attained any effectiveness.

The Background
Zee and Sony Pictures announced on August 27 that they had settled their six-month dispute related to the failed $10 billion merger and agreed to withdraw all claims against each other.

In a joint statement, both Zee and Sony Pictures said as per the settlement, they have agreed to mutually withdraw all respective claims against each other in the ongoing arbitration at the Singapore International Arbitration Centre (SIAC) and all related legal proceedings initiated in the NCLT and other forums.

Before settlement, both claimed a termination fee of $90 million (close to ₹748.7 crore) from each other for not complying with the MCA signed on December 22, 2021.

The legal tussles formally began in January 2024, when Sony retreated from the proposed merger with Zee, citing failure to meet certain “closing conditions” by the Indian firm. PTI