MUMBAI - In a recent development, Subhash Chandra, the founder of Zee Entertainment Enterprises, has accused the Securities and Exchange Board of India (SEBI) of bias which he believes contributed to the collapse of the proposed merger between Zee Entertainment and Sony (NYSE:SONY) Pictures. The merger, valued at $10 billion, was called off on Monday, with Sony demanding a $90 million termination fee. The fallout has had a significant impact on Zee's market position, with a sharp drop in its stock price by 30% and a reduction in market capitalization by over ₹7,000 crore.
Chandra's allegations against SEBI were made in a letter to Finance Minister Nirmala Sitharaman today, as reported by ET NOW sources. He referred to the regulatory body's 'predominant mind' as a factor that hindered the deal's success. This accusation comes a week after the merger's termination, which has stirred concerns about the protection of minority shareholders and the broader implications for corporate governance in India.
The conflict with SEBI dates back to a previous directive that barred Chandra and Punit Goenka, the then MD & CEO of Zee, from executive roles at the company. However, on October 30, 2023, the Securities Appellate Tribunal, led by Justice Tarun Agarwalla, overturned SEBI's directive, reinstating Goenka to his leadership position.
Adding to the complexity of the situation, Chandra had previously reached out to Sitharaman on January 16 to discuss the protection of minority shareholders amid the Sony merger issues. He also communicated the repayment of promoter debt, which had considerably reduced the promoter's stake in Zee from around 40% to just below 4%.
The termination of the merger and the subsequent fall in Zee's stock price have occurred amidst an ongoing SEBI investigation into alleged financial irregularities at Zee. Moreover, Zee's shares have been released from the Futures & Options (F&O) ban, signaling a turbulent period for the media conglomerate.
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