BANGALORE (Reuters) – Japanese group Sony announced on Monday the abandonment of the planned merger of its Indian unit with Zee Entertainment after more than two years of negotiations, citing unmet closing conditions, which Zee denies.
This ten billion dollar (9.19 billion euros) operation aimed to create a media composed of more than 90 television channels and a streaming service, in an India hungry for content.
Its failure weakens the Zee television group in particular, as competition intensifies. Disney is seeking to merge its Indian operations with billionaire Mukesh Ambani’s Reliance.
Sony said in a statement that certain “closing conditions” to the merger had not been met despite “good faith discussions” with Zee, and that the companies had failed to agree on an extension before the January 21 deadline.
“After more than two years of negotiations, we are extremely disappointed […]. We remain committed to strengthening our presence in this dynamic and growing market,” the company added.
Zee told Indian stock exchanges that Sony was seeking $90 million in breakup fees for alleged violations of the merger agreement and emergency interim measures, by “invoking arbitration.” Zee said it denies all allegations made by Sony and is taking appropriate legal action.
Sony and Zee did not specify on Monday which conditions had not been met.
Zee is currently facing a decline in advertising revenue, and its cash reserves fell to 2.48 billion rupees in the six months ended September 30, from 5.88 billion rupees a year earlier.
Sony said it did not expect the termination to have a material impact on its results for the year ending in March, having not factored the deal into its initial outlook.
(Reporting by Nishit Navin, Kashish Tandon, Chandni Shah and in Bangalore; Written by Chris Thomas and Aditya Kalra; French version Gaëlle Sheehan, edited by Sophie Louet)
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