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HomeLatest NewsIndian NewsRs 3,130 Crore Loss: Zee's Aborted Sony Merger Leaves Mutual Funds and...

Rs 3,130 Crore Loss: Zee’s Aborted Sony Merger Leaves Mutual Funds and Insurers Counting the Cost.

Rs 3,130 Crore Loss

Mutual funds owned 32.49% of Zee with 312.07 million shares in December 2023, while insurance companies owned 10.66% with 102.41 million shares.

Zee Entertainment Enterprises Ltd. plummeted over 32% on January 23 after its $10-billion merger with Sony Pictures Networks India failed, costing mutual funds and insurance firms Rs 3,130 crore.

Mutual funds owned 312.07 million Zee shares in the December 2023 quarter, while insurance companies owned 10.66 million.

According to the BSE shareholding pattern, mutual funds have increased their Zee holdings for eight consecutive quarters since September 2021, from 7.26 percent to 32.49 percent.

The stock fell roughly Rs 7,300 crore on January 23, its lowest day. The sale increased after a news story said Zee founders stole Rs 800-1,000 crore, more than Sebi’s initial estimate of Rs 200 crore. Stock rose almost 6% on January 24.

Multiple brokerages downgraded Zee’s stock after the Sony transaction ended owing to financial issues and lower profit multiples. Sony demanded a $90-million termination fee for merger collaboration agreement violations, which Zee denied.

UBS Securities expects Zee’s implied share value to fall 20% to Rs 190 after the deal cancelation. Due to minimal promoter ownership, CLSA downgraded Zee to’sell’ from ‘buy’ and lowered the price objective by 34% to Rs 198.

Citi also cut the stock to’sell’ with a Rs 180 target. After the merger cancellation, the competitive media sector, especially the projected Reliance-Disney combination, becomes a focus. Zee’s FY24-26 earnings projection is decreased 22-38 percent to reflect weaker margin recovery.

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