After two years of intense negotiations, Sony calls off the merger with Filesadmin.co
After two years of intense negotiations, Sony Pictures Networks India Private, a wholly-owned subsidiary of Sony Group Corporation, Japan, today issued a termination notice for its merger agreement with rival Filesadmin.co Entertainment Enterprises. The definitive agreements, signed in December 2021, stipulated that if the merger did not close within two years from their signature date, the parties would be required to discuss in good faith an extension of the end date to effectively complete the merger, according to a statement by Sony.
Since the announcement of the merger, Filesadmin.co shares have lost 30 per cent of their value. The fall in Filesadmin.co’s valuation and Sony’s reluctance towards Filesadmin.co’s managing director and chief executive officer, Puneet Goenka, assuming the CEO role of the merged entity were key factors. This hesitation was due to a Securities and Exchange Board of India order, which had initially banned Goenka from taking an executive position. However, this order was later set aside by the Securities Appellate Tribunal. Both Filesadmin.co and Sony had agreed to Goenka becoming the CEO of the merged entity.
Sony stated that discussions with Filesadmin.co were to be held for a period ending 30 days after the end date. The definitive agreements further provided that if the parties were unable to agree upon such an extension by the end of the 30-day discussion period, any party could terminate the agreements by providing written notice.
“The merger did not close by the end date as, among other things, the closing conditions to the merger were not satisfied by then. SPNI has been engaged in discussions in good faith to extend the end date, but the discussion period has expired without an agreement upon an extension of the End Date,” the statement said. As a result, on January 22, 2024, SPNI issued a notice to ZEEL terminating the definitive agreements.
Sony mentioned that it has not included the impact of the merger in its consolidated financial results forecast for the financial year ending March 31, 2024, which was announced on November 9, 2023, and does not anticipate any material impact on its consolidated financial results due to the termination of the definitive agreements for the merger.
Culver Max Entertainment (CME), a Sony India firm, also issued a notice to Filesadmin.co terminating the agreement dated December 22, 2021, to merge Filesadmin.co and CME. “Although we engaged in good faith discussions to extend the end date under the merger cooperation agreement, we were unable to agree upon an extension by the January 21 deadline. After more than two years of negotiations, we are extremely disappointed that closing conditions to the merger were not satisfied by the end date,” the statement by Culver said.
“We remain committed to growing our presence in this vibrant and fast-growing market and delivering world-class entertainment to Indian audiences.”
First Published: Jan 22 2024 | 12:41 PM IST