Zee seeks $90 million termination fee from Sony for failed merger

Zee Entertainment on May 23 said that it has sought Sony Group Corporation's India media unit, Culver Max Entertainment, and Bangla Entertainment Pvt Ltd (BEPL) to pay a $90 million (around Rs 748.5 crore) termination fee for ending the $10 billion merger.

"Culver Max and BEPL have failed to comply with their obligations under the merger cooperation agreement (MCA). Therefore, the Company has terminated the MCA and called upon Culver Max and BEPL to pay the termination fee i.e. the aggregate amount equal to $90,000,000, in accordance with the MCA," the company said in a filing to the exchanges on May 23. 

In a letter dated May 23, 2024, ZEEL officially notified Culver Max and BEPL about the termination of the MCA. Alongside the termination, ZEEL invoked the agreement's provisions to seek a termination fee.

Earlier this week, Zee declared that it has incurred Rs 432 crore in merger-related costs during 2023-24 and 2022-23 on failed media deal with Culver Max Entertainment. As per the filings, the firm's merger-related costs were Rs 256 crore in 2023-24 and Rs 176 crore in the previous year. 

More than two years after announcing their proposed merger, Sony declared on January 22 that the deal had been terminated, accusing ZEEL of failing to meet the closing conditions despite extending the closing period by a month. The MCA was executed on December 22, 2021 and had received all the key clearances from the stock exchanges, the Competition Commission of India and the National Company Law Tribunal.

Soon after the deal was terminated, Sony had sought $90 million in termination fees from Zee Entertainment for alleged violations of the merger agreement. ZEEL initiated legal proceedings to contest the claim.