The early trading hours witnessed a remarkable surge of over 7% in the shares of Zee Entertainment Enterprises Ltd (ZEEL), reaching a peak of Rs 192. This sudden uptick is attributed to renewed discussions between Zee and Sony Group regarding a potential merger. After the cancellation of a $10 billion deal last month, both companies have reignited talks, with representatives convening in Mumbai over the past fortnight to explore avenues for salvaging the merger, as per reports from The Economic Times.
Zee is expected to convey its decision to Sony within the next 24-48 hours regarding the acceptance of all terms and conditions, including conditions precedent (CPs). This development marks a significant reversal for Zee, which recently witnessed a steep 33% plunge in its share price, hitting a 52-week low of Rs 152.5 on January 23. However, recent optimism among investors stems from the anticipation of potential suitors for the company.
The initial announcement of the merger with Sony had led to a reevaluation of Zee's valuation, fueled by expectations of enhanced corporate governance and synergies. Yet, the termination of the deal resulted in several downgrades and sell calls from analysts, impacting the stock adversely.
Despite the challenges, Zee reported a noteworthy 141% year-on-year surge in its consolidated net profit during the December quarter, amounting to Rs 58.5 crore, despite a 3% decline in revenue to Rs 2,045 crore. The company remains focused on a gradual margin recovery, aiming for an EBITDA margin of 18-20% for FY26 and a revenue compound annual growth rate (CAGR) of 8-10%.
As discussions unfold, shareholders, including the Goenka family owning 3.99% of ZEEL, await further developments. Zee's stock, which experienced a surge post the initial termination of talks, has since fluctuated, prompting a reassessment of the business portfolio by Zee in the aftermath of the failed merger.
