Institutional investors want the Zee-Sony transaction to close as soon as possible, with or without Zee CEO Punit Goenka at the helm of the merged entity. On Sunday, Zee informed the exchanges that it has asked Sony to extend the deadline of the merger from December 21. Sony is yet to acquiesce to the request for an extension. This is after a stalemate between both sides with Sony adamant in not wanting Goenka to have an executive role in the merged entity, while Goenka continues to bat for the CEO position. 

With the request for extending the deadline and the merger getting delayed even further, institutional investors are keen to see the matter settled. 

Shriram Subramaniam, Founder and MD of InGovern Research Services, said: “Shareholders would expect Zee and Sony to close the transaction as soon as possible, as it has already been extensively delayed. The parties should also give a tentative timeline for closure of the merger process. Investors would expect Sony to be in control of the company with or without Punit Goenka at the helm. The competitive intensity in the media sector is only increasing and Zee and Sony cannot afford not merging.”

An institutional investor said on condition of anonymity that “Goenka should adhere to his prior position, where he assured shareholders that the merger would not be held up at the cost of his position in the merged entity”.  

Goenka’s comments

The investor is referring to Goenka’s comments when he was seeking relief from the courts on the SEBI confirmatory order, which barred him from holding any executive position in Zee or any of its subsidiaries. At that time, Goenka had maintained that the merger should go through whether or not he was the CEO or not. However, experts note that it is in the legal ambit for Goenka to continue on as the CEO of the merged entity, especially as the Securities Appellate Tribunal struck down SEBI’s confirmatory order. 

However, Abhishek Malhotra, Former Managing Partner at TMT Law Practice, said: “There is no legal impediment in Goenka staying on as the MD and CEO. Clearly SAT has seen some merit in the matter to pass that order. However, it is an interim order. If SEBI’s investigation reveals something damning, then Goenka may have to step down. Sony, which has a relatively clean global image, may not want that. Hence, in anticipation of what is a likely outcome, parties may decide to change the original proposition of having Goenka as the CMD. It’s completely a commercial call at this juncture.” 

Another expert added that “while we do not think it is a good idea for Punit Goenka to be at the helm of the merged entity, that is the cost of getting the deal done. We expect Sony to bring checks and balances regardless, since they have the controlling stake”.

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