India's Zee Entertainment and Sony settle dispute over failed $10 billion merger

India's Zee Entertainment Enterprises and Sony's Indian subsidiary have agreed to withdraw all claims against each other related to their aborted $10 billion merger, Zee said in a statement on Tuesday. The resolution marks the end of a lengthy legal battle that followed the collapse of the merger earlier this year.

The merger, which was initially announced with great excitement, was called off in January. According to Reuters, the deal fell through in part because Zee was unable to meet certain financial conditions for the merger. After the failure, Zee attempted to enforce the merger in India's National Company Law Tribunal (NCLT), but later decided to “aggressively pursue” its claims against Sony through arbitration at the Singapore International Arbitration Centre (SIAC).

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However, according to Zee's latest statement, both the companies have agreed to withdraw all claims against both the SIAC and the NCLT. The company also clarified that the settlement is not cash based and neither party has any ongoing obligations or liabilities to the other.

The announcement had an immediate impact on Zee's shares, which rose 13 percent on Tuesday. Despite this uptick, the company's shares are still down about 35 percent since the merger was completed in January.

Analysts reacted positively to the news. “This is a much-needed breathing space for Zee,” commented Karan Taurani, an analyst at Elara. The conclusion of the legal dispute takes a significant burden off the company, said Shriram Subramanian, founder of InGovern Research Services, a proxy advisory firm. With the legal dispute settled, Zee's management can now focus on pursuing its growth goals without the merger saga looming in the background.

This settlement represents a pivotal moment for Zee as it allows the company to move forward without the shadow of ongoing litigation and focus on future opportunities.

Source: Reuters