NEW DELHI: Shares of Zee Entertainment rose as much as 6% in opening trade on Thursday after the company received conditional approval for a merger with Sony from the Competition Commission of India (CCI).
The deal, which was announced a year ago, received approval from the Competition Commission of India after the regulator agreed to the “voluntary treatment” offered by the parties. The watchdog said it approved the deal with some changes.
The deal is still subject to regulatory and other approvals, ZEEL said. In a separate statement, Sony Pictures Networks India said it was happy to receive ICC approval for the merger.
Following the development, shares of Zee Entertainment jumped over 6% to Rs 283.75, before paring some gains to trade at Rs 277.40 as of 09:45. The certificate stood at Rs 267.50 on Tuesday.
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Market analysts remain positive on Zee Entertainment after the merger, predicting that no major flagship channel will close after the merger due to poor content. We believe that organizations can offer to close channels, but the impact on their income may be less because the channels may be based on demand and not attract demand from customers, Karan Taurani of Elara Capital said. He maintained a good standing with Zee.
Traffic analysts expect the final CCI process to follow in the next three weeks, which will provide more details in this regard. Shareholders will meet on October 14 for approval. The process could take another 15 minutes and the merged company could be seen in early FY25, if all approvals fall within the given time frame, experts said.
Pankaj Pandey, Head of Research at ICICIDirect said, “We still don’t know the best details on whether there will be a decline in the GEC channel model in the region, but we have a buy rating on the stock.”
Global brokerage CLSA is also positive on social media and believes that CCI’s approval of Zee and Sony’s merger is a big positive and is a catalyst for the stock’s valuation. Sony, once merged with Zee, will be listed on the Indian stock exchange, holding a 51% stake in the new company and $1.5 billion. “The valuation for Zee shares is compelling and we recommend buying it with a target price of Rs 316,” he said.
