Zee Entertainment (ZEE.NS) shares tumbled nearly 7% on Tuesday after the markets regulator restricted its promoters from retaining board posts in any listed firm for one year, potentially delaying its merger with a Sony (6758.T) affiliate.
On Monday, SEBI alleged Zee group promoters Subhash Chandra and Punit Goenka deliberately diverted company funds to the group’s linked firms.
Sony and Zee merged their TV, film, and streaming networks in late 2021. However, a legal dispute with lenders over Zee group loan defaults and allegations that stock markets were contemplating merger approvals have delayed the acquisition.
The deal named Punit Goenka, the merged entity’s managing director, and CEO.
Amit Kumar Gupta, founder, and chief investment officer of Delhi-based equities research firm Fintrekk Capital, said SEBI’s prohibition will hurt its merger with Sony. Chandra and Goenka can appeal.
Chairman R. Gopalan stated that Zee’s board is considering the SEBI judgment and seeking legal guidance to proceed.
Zee was relieved when an Indian panel halted IndusInd Bank Ltd. (INBK.NS)’s insolvency proceedings against the media business in February. The lender and company settled later.
In February, Goenka said the company’s priority is completing the Sony deal. Zee shares regained some losses and were down 1.7% at 10:29 IST.
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