BackZee Entertainment shares zoom 25% after merger announcement with Sony Pictures
Zee Entertainment shares jumped 24.97 per cent to their 52-week high of ₹319.50 on the BSE
PremiumNew Delhi: Shares of Zee Entertainment Enterprises Limited today zoomed 25 per cent after the announcement of a merger with Sony Pictures. The stock jumped 24.97 per cent to its 52-week high of ₹319.50 on the BSE. At the NSE, it zoomed 24.99 per cent to its 52-week high of ₹319.60.
Leading media firms Zee Entertainment and Sony Pictures on Wednesday said they have received in-principle approval for a merger between ZEEL and Sony Pictures Network India.
Punit Goenka, who is the managing director & chief executive officer of ZEEL, is facing pressure from the two largest shareholders of the company - Invesco and OFI Global China Fund LLC - to quit the post, will continue to remain managing director & chief executive officer of the merged entity.
Yash Gupta, Equity Research Analyst, Angel Broking Ltd recommends investors to be cautious."In the merged entity Sony will hold 53% and Zeel will hold 47% of total shareholding, so sony pictures will be holding a majority stake in the merged entity. Sony Pictures will also infuse $1.57 billion ( ₹11,000 crore) into the merged company. We recommend investors to be cautious as Zee Entertainment Enterprises Ltd up by 78% from 170 to 303 in the last month and as of now, valuations are not disclosed by Zeel," he said.
Santosh Meena, Head of Research, Swastika Investment Ltd. said that it was expected that Punit Goenka will not easily lose his positions and Zee may come up with a white knight or another counter offer. He further added that it is a win-win situation for Zee shareholders
“The market knew that it will be a win-win situation for Zee shareholders whether there will be any change in management and board or some other player come to buy a majority stake in the company. The stock is trading at very attractive valuations and it is one of the strongest and FIIs favourite stocks in the media space and if this deal concludes then we may see a big rerating in the counter," said Santosh Meena.
Jitendra Upadhay, Sr. Equity Research Analyst, Bonanza Portfolio says the deal will be able to drive long term growth in Zee’s valuation as per the merger term seems reasonable even this valuation there is a possibility of an 80 to 100% upside at least.
The shareholders of Sony Pictures will hold a majority stake in the merged entity. They will also infuse growth capital into SPNI as part of the merger such that SPNI has approximately $1.575 billion at closing, for use in pursuing other growth opportunities.
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!
