Interim relief? Zee Entertainment stock zooms 6% post Sony Pictures' comment; volumes up 5x

Shares of Zee Entertainment Enterprises snapped their two-day losing streak and rose more than 6% as investors drew some comfort from the comments by Sony Pictures Entertainment on the merger deal.

Gains in the stock were backed by strong volumes of more than 45 million shares. This is five times higher than the six-month average trading volume of over 8 million shares.

Following the interim order passed by markets regulator Sebi against Zee Entertainment’s Chairman Emeritus Subhash Chandra Goenka and Managing Director and CEO Punit Goenka, Sony Pictures said that it is closely monitoring the developments that can affect the merger deal.


However, Sony did not outright raise concerns over the 2-year-old merger deal falling through.

"There have been several erroneous press reports recently speculating about the future of ZEEL’s planned merger with SPNI following Sebi’s interim order against Subhash Chandra and Punit Goenka. We take very seriously the Sebi interim order and will continue to monitor developments that may affect the deal," Sony Pictures said in a statement.

The deal has seen an unexpected delay due to Zee’s legal battle with lenders over loan defaults and reports that stock exchanges were reconsidering approvals for the merger.

Adding to the woes was the interim order by Sebi last week barring both Chandra and Punit Goenka from holding any directorial positions until further notice.

This particular order is significant as one of the key conditions of the merger deal is that Goenka will be heading the merged entity.

On Monday, the Securities Appellate Tribunal (SAT) adjourned the hearing on the pleas by the Goenkas against the interim order on June 26.

While shares of Zee got a breather in trade on Wednesday, the cloud of uncertainty over the merger deal prevails until the final order of SAT.

“We would need to track what SAT/Sebi further does on this matter. While this creates uncertainty on process and timelines, one scenario that could likely pave the way for the merger is devoid of the presence of any Zee promoters in the merged entity,” an analyst said.

However, one needs to see if both entities agree to the same and if fresh approvals for the change in the terms of the deal will be required, the analyst added.

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