Brokerages Mixed After Zee Entertainment Ends 3-Year Merger Impasse With Sony India

Brokerages had a mixed reaction on Zee Entertainment after the firm announced a settlement with Sony India over merger disputes.

What Happened: Zee Entertainment shares rocketed on Tuesday after the firm reaching a non-cash agreement to settle all disputes related to a merger agreement with Culver Max Entertainment, which operates as Sony Pictures Networks India, and its group firm, Bangla Entertainment (BEPL).

The settlement will result in the withdrawal of all claims against each other in the ongoing arbitration at the Singapore International Arbitration Centre, National Company Law Tribunal (NCLT) and other forums, Zee said in press release.

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Brokerage Views: City had a “sell” call on the stock with a target price of ₹137. The settlement with Sony India is expected to alleviate investor concerns, particularly regarding potential liabilities for Zee stemming from the termination of the merger, the brokerage said.

Investors are likely to closely monitor Zee for any significant improvements in its ad revenue market performance following the settlement. However, Citi expressed apprehension about the potential impact of cost-saving measures, revenue and competitive positioning, especially in light of the ongoing consolidation in the industry.

UBS maintained a “neutral” rating for Zee, setting a target price of ₹180. It views the settlement with Sony India favourably, as it eliminates a major overhang and could positively impact the company’s stock performance.

Kotak Securities had a “buy” recommendation for the stock with a target price of ₹160.

Price Action: Zee Entertainment’s shares were down 0.88% to ₹149.50 on Wednesday.

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