SONY'S India unit finalised its merger plans with local broadcasting giant Zee Entertainment on Wednesday (21) in a deal that may yet be blocked by fierce opposition from a disgruntled US investor.
Analysts say the arrangement could create the country's second-biggest entertainment network, rivalling market leader Disney.
The proposal gives Zee's founding family four per cent of the new entity but keeps them in management control, with chief executive officer and managing director Punit Goenka to continue at the helm.
"The combined company will create a comprehensive entertainment business, enabling us to serve our consumers with wider content choices across platforms," he said in a statement.
But Goenka's tenure has been opposed by Zee's largest shareholder Invesco, which in September demanded his ouster for "repeated governance failures and under-performance".
Zee and Invesco have since faced off in court over the US investment company's pursuit of an extraordinary general meeting and board overhaul.
Sony's deal would also allow Goenka's family to raise its stake in the combined entity to 20 per cent in the future - a clause shareholders led by Invesco are likely to oppose.
A successful merger would nonetheless be a "win-win proposition" that would expand the reach of both companies in India, Elara Capital media analyst Karan Taurani said.
"Sony has a strong sports offering and an urban entertainment offering, which Zee does not have, and Zee is very strong in the regional and rural segments," he added.
India, home to 1.3 billion people, has an entertainment market worth $24 billion (£18.02 bn), according to accounting giant EY.
If approved by regulators and shareholders, the deal is expected to be completed by the end of March 2022 and the new company will be publicly listed in India.
Sony Pictures Networks India will hold a majority 50.86 per cent stake under the proposed merger.
(AFP)
