Zee Entertainment’s shares fell 33% to finish at ₹155.90 on the BSE on Tuesday, January 23, as investors became uneasy over the cancellation of the Zee-Sony merger agreement and expressed concerns about Zee’s potential for future growth and the stock’s overall valuation.
During the day, Zee Entertainment’s share price fell 34.2% to a new 52-week low of ₹152.50, after opening at ₹208.60 against the previous close of ₹231.75.
Zee Entertainment’s market value is currently estimated to be ₹14,974.50 crore, a substantial decline from the almost ₹22,260 crore noted in the previous session. This is a significant loss in a single trading session of about ₹7,285 crore.
About Zee-Sony Merger:
There had been a lot of talk lately about the Zee-Sony deal possibly falling through. This has an impact on the share price of Zee Entertainment, which has dropped by almost 43% in January alone.
Sony Group Corp. has terminated Zee Entertainment Enterprises Ltd. (ZEEL), as previously reported by Mint, stating its intention to rescind the merger between its India arm and the media network.
Zee Entertainment’s market value is currently estimated to be ₹14,974.50 crore, a substantial decline from the almost ₹22,260 crore noted in the previous session. This is a significant loss in a single trading session of about ₹7,285 crore.
“The merger did not close by the end date as, among other things, the closing conditions to the merger were not satisfied by then,” stated Sony in a statement.
Although there has been good faith conversation about extending the deadline, Sony Pictures Networks India Private Ltd (SPNI) has not reached a consensus on an extension of the deadline. Because of this, SPNI sent ZEEL a notification on January 22, 2024, ending the final agreements.
Global stockbroker CLSA modified its Zee Entertainment recommendation, lowering the target price of the company by 34% to ₹198 and switching from a prior “buy” rating to a “sell.”
“With the Zee-Sony merger ending, we believe Zee’s PE (price-to-earnings ratio) will slump back to twelve-times levels, seen before the Sony merger declaration in August 2021,” according to the brokerage.
The CLSA brought attention to the significant competitive obstacles that Zee would face, which would further discourage the stock. The company anticipates more competition in the media space, especially in light of the rumored Reliance and Disney Star merger.
