Sony scraps India merger, seeks $90M termination fee
Sony (SONY, 6758.T) has called off the planned $10 billion merger of its India assets with India's Zee Entertainment Enterprises. The move comes after the deal failed to close by the January 21st deadline, following nearly two years of negotiations. With the acquisition talks now terminated, Sony is seeking a $90 million termination fee from Zee, claiming merger agreement breaches.
Yahoo Finance's Seana Smith and Brad Smith break down the details.
For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.
Editor's note: This article was written by Angel Smith
Video Transcript
BRAD SMITH: Sony shares popping today after announcing that it is calling off the merger with its Indian unit with Mumbai-based media company, Zee Entertainment. After about two years of negotiations, the deal valued at $10 billion failed to close by the January 21 end date. Now Sony is seeking a termination fee of $90 million from Zee for alleged breaches of the merger agreement terms here. So that's something that is no doubt heading to the courts and determining whether or not that full fee will be paid out here as well.
SEANA SMITH: And the reason why Sony was initially interested in Zee was because of the deep library that the company does have when it comes to some of those regional Indian languages and dozens of their local TV channels. So they're trying to push further into this region. That of course, will be critical here going forward given their deep content, the library content that they have.
Now the reason why we're seeing the stock price move higher today, obviously is tied to the financial transaction part of the deal. And the fact that they won't be spending that much money on this deal could at least move the stock higher at least in the short term. But down the line, you got to think about how this potential termination here is going to impact Sony's approach to the Indian market. And we know it's very important in terms of the growth trajectory there and how that is also-- how they're going to navigate some of these headwinds here in terms of getting a deal like this approved and also shareholders on board going forward.
BRAD SMITH: It was really interesting because even as this was playing out, one of the larger things was you had in that region, in India as well, Disney selling off or at least in talks in fourth quarter of last year selling off its India business to Reliance. So now there's a question of, OK, if all of these things are still perhaps in limbo or in conversation, does Sony look at another entity within that region that gives it the type of reach that it's looking to get among that entertainment consumption profile and consumers there as well?
SEANA SMITH: Yeah, certainly. And it's going to be a name here to keep in mind as we look ahead to some of those trenders that we are likely going to see here over--
