Sony Group Corp, especially sensitive to this shadow over the deal given the stringent corporate governance norms in Japan and the US, is said to be pushing for its longstanding India executive, NP Singh, to become the CEO of the merged entity. Goenka is still the subject of a Sebi investigation, despite the recent relief granted by the Securities Appellate Tribunal (SAT).
While Goenka has received interim relief from the SAT, the order states that he will have to cooperate with Sebi in the probe. SAT has also said in its order that if any evidence is discovered against Goenka, Sebi may follow the legal process and take relevant action.
The development has significant implications for the merger agreement between ZEEL and Culver Max Entertainment, the Indian media division of Sony Group Corp, since Goenka’s nomination as MD and CEO of the merged entity was a necessary condition for the merger.
Tony Vinciquerra, chairman of Sony Pictures Entertainment, Ravi Ahuja, chairman of Sony Pictures’ Global Television Studios and Corporate Development, and Goenka have held talks to find a way out.
However, the two sides have not made any progress on this thorny issue.According to a person familiar with the situation, Goenka has made it clear to Sony’s brass that he wants to be the MD and CEO of Sony-Zee, particularly after the SAT verdict overturned Sebi’s regulatory ban. This had barred him from holding a directorship or a top managerial role in a listed entity, including the proposed Sony-Zee combine.In June, Sony’s subsidiary Sony Pictures Entertainment issued a statement saying that it takes Sebi’s order against ZEEL promoters very seriously and will continue to monitor developments that may affect the deal.
“We do not comment on speculation and hence cannot offer a comment,” a ZEEL spokesperson said. Sony declined to comment.
While Goenka stated earlier that the merger would go through whether he is the CEO or not, particularly since it benefits 96% of stakeholders, sources said he will use the SAT’s favourable order to push his case.
“It is imperative that Sony and Zee amicably resolve this issue since there is a lot riding on the merger between the two firms,” said Nitin Menon, managing partner, NV Capital. “The Sony-Zee merger will not just unlock value for the shareholders of the two companies but also for the media and entertainment ecosystem.”
The Sony-Zee merger, which was agreed in December 2021, has taken longer than expected to complete because of the legal and regulatory issues that the promoters of ZEEL are facing.
The merger was to be completed originally in eight to 10 months.