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Media and entertainment giant Zee Entertainment Enterprises Ltd's board has cleared merger deal with Sony Pictures Networks India (SPNI), according to various reports and an official announcement is expected soon.

Zee has announced a 90-day period to conduct due diligence for the merger process which comes to a close today (21 December). Both the companies raced against time to complete the inspection of books post which the respective board cleared the deal.

Here’s all you need to know about the deal.

On 21 September, ZEE's board has given in-principle approval for its merger with Sony. Zee said that the company and Sony have entered into a non-binding term sheet to bring together their linear networks, digital assets, production operations and program libraries.

Following the merger, the shareholders of Sony will hold a majority stake (52.93%) in the merged entity, while Zee Ent will hold about 47.07%.

As part of the merger, Punit Goenka will continue to be the Managing Director and CEO of the firm. Majority of the board of directors of the merged entity will be nominated by Sony Group and the entity will be a publicly listed company in India.

According to the term sheet, the promoter family is free to increase its shareholding from the current - 4% to up to 20%, in a manner that is in accordance with applicable law.

The shareholders of Sony will also infuse growth capital into SPNI as part of the merger such that SPNI has approximately USD1.575 billion at closing, for use in pursuing other growth opportunities.

Zee, which has a presence in television broadcasting and digital media with brands such as Zee TV, has been under pressure from top investors for a management reshuffle, including the exit of Chief Executive, Punit Goenka, from the board.

However, Zee is entangled in a legal battle with its largest shareholder Invesco after the fund in an open letter raised issues against the stake enhancement of the promoter family. Invesco in the letter dated October 11 had asked “why the founding family, which holds under 4% of the company’s shares, should benefit at the expense of the investors who hold the remaining 96%".

Invesco along with OFI Global China Fund holds 17.88% in Zee and the vote of the fund on merger assumes significance.

Invesco had demanded an extraordinary general meeting (EGM) to rejig the board and sought Goenka’s ouster. The matter is currently being argued at the National Company Law Tribunal (NCLT), National Company Law Appellate Tribunal (NCLAT) and Bombay High Court.

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