Sources close to matter told businessline that Goenka’s ambitions for the MD position have been bolstered after the Securities Appellate Tribunal set aside SEBI’s order that barred him from taking up any key managerial position.
It was only in June that Goenka had told shareholders that the merger of Zee-Sony will be completed “with or without” him at the helm. At the time, SEBI had barred Goenka from the boards of Zee Group after it found in its investigations that Goenka and Chandra had allegedly siphoned off funds from ZEEL to show false recovery of loans. Goenka was banned from Zee Group companies for at least eight months while SEBI completes its investigations. This put a wrench on Zee-Sony merger plans in which Goenka’s position as the MD and CEO of the merged entity was crucial part of the agreement between the two sides.
With the merger being already delayed for two years, Goenka reassured all parties involved that the merger was a top priority and would go on without him too.
However, SAT’s decision last week appears to have bolstered Goenka’s resolve for staying at the helm. “Zee is working towards the merger as per the existing agreement with Sony. The agreement states that Punit Goenka will be the CEO. Any changes to the agreement will have to be approved by all stakeholders including the shareholders and NCLT,” said a source aware of the development adding that any changes to the agreement between Sony and Zee could delay the merger further.
On the other hand, there are concerns over potential action against Goenka in the future given that SEBI is still continuing its investigation against him. Sources close to Sony said that the Japanese stakeholders of the company could back someone from within the Sony group to take up the top position of the merged company.
“While SAT has set aside the ban, what if SEBI’s final report reinstates the ban on Goenka? SEBI could even challenge the SAT order in a higher court and get the ban reinstated. Perhaps Sony wants to take the safe route by appointing a non- controversial executive at the helm,” said a legal expert.
Industry experts said the merger between Sony and Zee should not be delayed any further given that Reliance-backed Jio Cinema/Viacom18 is close to merging with Disney-Hotstar.
“Both Sony and Zee realise that a merger is absolutely needed for survival. Reliance’s acquisition of Disney’s India properties will be an even bigger consolidation than a Zee-Sony merger, and in this case the consolidation of the media market into a duopoly is the only natural course,” the expert said.
If Sony pursues appointment of another CEO, experts indicate that they will have to go back to and get the approvals again. This delays the merger, even as the Japanese company has committed to complete the merger in the first half of the 2024 fiscal.
Abhishek Malhotra, former managing partner at TMT Law Practice, added that if Zee tries to resist the amendment in terms of the merger the process will get even longer. Zee is also likely to push for a change in merger terms if Sony insists on appointing another CEO than Goenka.