Sony’s $10 Billion Zee Merger at Risk of Collapse

Sony’s India unit is reportedly ready to cancel its $10 billion merger with Zee Entertainment.

The deal, in the works since 2021, is at risk due to an impasse over the question of whether Zee CEO Punit Goenka would lead the new company, Bloomberg News reported Monday (Jan. 8), citing sources familiar with the matter.

According to Bloomberg, the initial merger agreement would have made Goeneka chief executive. However, sources say Sony has changed its mind about giving him the job due to a regulatory investigation.

One source told Bloomberg that Sony plans to submit a termination notice ahead of a Jan. 20 deadline for finalizing the deal. Goenka, meanwhile, has not backed down from his plan to lead the combined company, another source said. The report said the two sides are still holding talks, and a deal could still happen ahead of the deadline.

Bloomberg noted that a combined company would create entertainment powerhouse with the weight to compete with the likes of Disney, Amazon and Netflix in India, the world’s most populous country.

In June, the report said, India’s Securities and Exchange Board of India alleged that Zee faked the recovery of loans to cover private funding deals by its founder, Subhash Chandra, Goenka’s father, and accused both men of abusing their power.

The merger itself caught the attention of regulators in 2022, with the Competition Commission of India warned that the combined company would hinder competition by having “unparalleled bargaining power.”

News of the possibly jettisoned deals comes just after a year that was among the worst years for mergers and acquisitions (M&A) activity in a decade, as total volumes fell 18% in 2023 to about $3 trillion. That was lowest figure since 2013, when deal volumes reached $2.8 trillion.

“We were surprised by how difficult it was to bring deals forward in 2023. I think there will be an M&A rebound, but how much of it actually appears in 2024 and how much of it is a setup to 2025 remains to be seen,” Paul J. Taubman, founder and CEO of investment bank PJT Partners, told Reuters last month.