Shares of Zee Entertainment Enterprises Ltd. swung after the broadcaster finalised the terms of merger with Sony Pictures Networks India Pvt.
Zee Entertainment's stock rose nearly 3.5% in opening trade but pared all gains to trade 4.3% lower. The stock ended the session with a 0.27% gain compared with a 1.1% rise in the Nifty 50.
The two entertainment firms agreed for a merger on Sept. 22. The exclusive negotiation period of 90-days came to an end on Dec. 21. The deal announcement comes amid an ongoing dispute with a long-standing institutional shareholder, Invesco Developing Markets Fund, seeking to oust the existing management.
Deal Contours
Sony Pictures will own a 50.86% stake in the merged entity.
Essel Holdings Ltd. will own 3.99%, while Zee public shareholders will own 45.15% according to the merger agreement.
Shareholders of Zee will get 85 shares in Sony Pictures Networks for every 100 shares they held in Zee Entertainment. The shareholders will cumulatively get 81.65 crore shares of Re 1 face against 96.05 shares of Re 1 face held in Zee Entertainment.
Zee promoters will limit the equity they own in the merged entity to 20% of outstanding shares.
Sony Pictures will subdivide shares and allot bonus shares through a bonus issue for capital enhancement.
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