Will Zee-Sony merger proceed irrespective of Punit Goenka being the CEO?

Punit Goenka, CEO and MD of Zee Entertainment Enterprises, has said that the Zee-Sony merger will go through whether or not he is the CEO of the merged company. 

In the interim order on June 12, the Securities and Exchange Board of India (SEBI) had barred Essel Group chairman Subhash Chandra and Goenka from holding the position of director or any key managerial personnel in any listed company for siphoning off funds of the media firm.

In an interview with Mint, Goenka said that the merger is of utmost importance to him and he is completely focused on that. "The merger should go through irrespective of whether I am the CEO or not," he added. 

Goenka was set to become the merged entity's managing director and CEO.

The comments came after Sony Pictures Entertainment (SPE) on Wednesday said that it has taken SEBI's interim order very seriously and it will continue to monitor the developments that may affect the Sony-Zee merger deal.

Sony's board is unhappy with the developments around Zee Entertainment in India, several media reports had stated, adding that the Japanese multinational may consider to invoke force majeure and material adverse clauses in the proposed merger. 

Karan Taurani, SVP- Research Analyst (Media, Consumer Discretionary and Internet), Elara Capital, also agreed with Goenka. 

"There is a high likelihood of the merger going through without Goenka in line with our view. In case he does not get relief at the Securities and Appellate Tribunal (SAT), the merger will go through without him, with a Sony representative as CEO," Taurani said. 

"Sony and Zee may need shareholder/board approval for change in CEO position in a worst-case scenario. The above should be easier and faster.

NCLT approval too will move faster once the outcome of SAT order is known," he added. 

SAT on Monday said it will continue the hearing of Zee Entertainment Enterprises' plea, challenging market regulator Sebi's interim order, on June 26.

Meanwhile, the National Company Law Tribunal (NCLT) hearing on the potential merger of ZEEL with Sony Pictures Networks India is also on June 26.

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