Last Updated: February 20, 2024, 11:48 IST
Zee-Sony Merger Talks Restart? Shares of Zee Entertainment Enterprises Ltd (ZEEL) rallied over 7 per cent to the day’s high of Rs 192 on Tuesday as the media house re-initiated talks for a merger with Sony Group after the $10 billion deal was cancelled last month. Despite the mentioned rise, Zee shares have slipped around 35 per cent on a year-to-date (YTD) basis.
In a dramatic twist, Zee Entertainment (ZEEL) and Sony Group Corporation are re-engaging in talks to salvage their $10 billion merger, reports claimed. Representatives from both sides have held meetings in Mumbai, aiming to overcome key differences and reach an agreement within the next 48 hours, according to a report by Economic Times.
Sony terminated the merger with Zee due to certain unresolved conditions and leadership disputes, including disagreements over CEO Punit Goenka’s involvement in regulatory issues.
During an earnings call, Goenka had mentioned that the termination was reviewed by his board and appropriate steps were taken in consultation with the legal experts. Zee even approached the National Company Law Tribunal (NCLT) to seek directions on the implementation of the scheme, he said.
“I certainly wanted the merger to be implemented. In line with this aspiration, we even took several steps towards divestment or closure of profitable businesses in the domestic and international markets. I personally offered several proposals and solutions to Sony, to address their demands, but unfortunately, they remained unaccepted. Since the matter is sub-judice, I would not like to say more and let the law take its own course,” Goenka stated.
On BSE, around 12.74 lakh Zee shares changed hands today. The figure was lower than the two-week average volume of 17.28 lakh shares. Turnover on the counter came at Rs 23.96 crore, commanding a market capitalisation (m-cap) of Rs 17,846.45 crore.
The stock was seen trading lower than the 5-day, 10-, 30-, 50-, 100-, 150-day and 200-day simple moving averages (SMAs) but higher than the 20-day SMA. The counter’s 14-day relative strength index (RSI) came at 43.46. A level below 30 is defined as oversold while a value above 70 is considered overbought.
The company’s stock has a negative price-to-equity (P/E) ratio of 128.43 against a price-to-book (P/B) value of 1.74.
Earlier on January 23, Zee shares had crashed 33 per cent to a 52-week low of Rs 152.5 to record its worst single-day fall in history. Some bottom fishing was noticed in the next few days on expectations that Zee will draw other suitors for potential deals.
The stock has been the subject of multiple de-ratings and sell calls since the Sony deal was terminated. CLSA had downgraded Zee to SELL from BUY with a revised target price of Rs 198, Nuvama also reduced its FY25E/26E EPS on Zee by 16 per cent/24 per cent and downgraded the stock to reduce rating with a target price of Rs 190.
Elara had downgraded Zee to sell with a target price of Rs 170 while Motilal Oswal had also downgraded the stock to neutral with a target price of Rs 200.
