ZEE-Sony Failed Merger: NCLT Grants Zee Entertainment Permission To Withdraw Merger Implementation

The National Company Law Tribunal (NCLT) Mumbai bench has granted Zee Entertainment Enterprises Limited (ZEEL) permission to withdraw its application seeking the implementation of a merger arrangement with Sony Group Corp-owned Culver Max Entertainment and Bangla Entertainment. This decision follows the termination of the merger agreement by Culver Max and Bangla Entertainment on January 22, 2024 for an alleged breach of the merger cooperation agreement (MCA). The initial merger agreement between ZEEL and Sony was signed on December 21, 2021 which was to consolidate their businesses in a significant multi-billion-dollar deal. However, the termination of the agreement halted the process. ZEEL's application sought to implement the composite scheme of arrangement between the involved companies, but this was challenged by Culver Max and Bangla Entertainment on grounds of validity. Culver Max and Bangla Entertainment initiated arbitration proceedings against ZEEL at the Singapore International Arbitration Centre (SIAC) and sought $90 million in termination fees due to alleged breaches of the MCA. Following this, ZEEL decided to withdraw its application to focus on pursuing its claims and exploring strategic opportunities to enhance shareholder value. Background and Agreements: ZEEL, Culver Max, and Bangla Entertainment entered into a merger cooperation agreement (MCA) on December 22, 2021. The MCA stated that the merger would be effective only upon fulfilling specific conditions as outlined in the agreement. Both parties filed necessary applications for approval of the scheme before the NCLT, and conditional sanction orders were issued in August 2023. The effectiveness of the scheme was contingent upon satisfying all conditions outlined in the MCA. However, ZEEL failed to fulfill the required conditions to the satisfaction of Culver Max and Bangla Entertainment before the stipulated 'End Date'. As a result, Culver Max and Bangla Entertainment terminated the MCA and initiated arbitration proceedings at SIAC. ZEEL filed an application in NCLT for implementation of the scheme. In response, Culver Max and Bangla Entertainment filed applications challenging the maintainability of ZEEL's application and argued that the NCTL lacked jurisdiction due to the ongoing arbitration. ZEEL subsequently filed an application and sought to withdraw its implementation application. The NCLT noted the complexity and multiplicity of litigation arising from the ongoing disputes. The NCLT allowed ZEEL to withdraw its application and held that there is a need to avoid parallel legal proceedings in both the NCLT and SIAC. The NCLT stated that the parties are at liberty to pursue their respective remedies through appropriate legal channels. Case Title: Zee Entertainment Enterprises Limited Vs Bangla Entertainment Private Limited And Anr Case Number: C.A. 32/MB/C-III/2024, C.A. 54/MB/C-III/2024, C.A. 55/MB/C-III/2024, C.A. 114/MB/C-III/2024 In. C.P.(CAA)/209/MB/C-III/2022 Advocate for the Applicant: Sr. Adv. Janak Dwarkadas a/w Adv. L. Viswanathan i/b Cyril Amarchand Mangaldas Advocate for the Respondent: Sr. Adv. Darius Khambata a/w. Sr. Adv. Gaurav Joshi. Date of Judgment: 24.06.2024 ClickHere To Read/Download Order or Judgment

ZEE-Sony Failed Merger: NCLT Grants Zee Entertainment Permission To Withdraw Merger Implementation

Rajesh Kumar

Tags