Brokerages mixed after Zee Entertainment ends three-year merger deadlock with Sony India

The brokers reacted mixed to Zee Entertainment after the company reached an agreement with Sony Germany about merger disputes.

What happened: Zee Entertainment shares surged on Tuesday after the company reached a non-cash agreement to resolve all disputes related to a merger agreement with Culver Max Entertainmentthat as Sony Pictures Networks Indiaand its group company, Bangla Entertainment (BEPL).

The settlement will result in all claims against each other in the ongoing arbitration proceedings before the International Arbitration Centre Singapore, National Company Law Tribunal (NCLT) and other forums, Zee said in a press release.

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Brokerage Views: City has given a sell rating on the stock with a target price of Rs 137. The agreement with Sony India is likely to ease investor concerns, especially regarding potential liabilities for Zee arising from the termination of the merger, the brokerage said.

Investors will likely watch Zee closely following the deal to see if its performance in the advertising market improves significantly, but Citi raised concerns about the potential impact of cost-cutting measures on revenues and competitive position, particularly given the ongoing consolidation in the industry.

UBS maintained a neutral rating on Zee and set a price target of ₹180. The deal with Sony India is viewed positively as it removes a large overhang and could have a positive impact on the company's stock performance.

Kotak Securities recommended a “buy” rating on the stock with a target price of ₹160.

Price promotion: Shares of Zee Entertainment fell 0.88% to ₹149.50 on Wednesday.

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