Indian entertainment conglomerate Zee Entertainment on Wednesday said it urged Sony to revive their blockbuster entertainment merger and has sued the Japanese tech giant over the deal’s termination.
Sony earlier this week called of the transaction with Zee Entertainment, which is reported to be worth $10 billion.
A major media presence in India, Zee owns several TV channels, a movie studio and a streaming service locally.
Sony is seeking a $90 million breakup fee from Zee over the collapsed merger, according to Zee, which said the company is pursuing this sum due to “alleged breaches by ZEEL [Zee Entertainment Enterprises Limited of the terms of [merger cooperation agreement], invoking arbitration and seeking interim reliefs against ZEEL.”
In a filing, Zee said it denies that Sony is entitled to call off the merger agreement and that its claim for a termination fee is “legally untenable and has no basis whatsoever.”
Sony is “in default of their obligations to give effect to and implement the Scheme,” Zee said, adding that it calls on Sony to withdraw its termination and to confirm that it will respect its obligations by coming back to complete the deal.
Sony’s European representatives were not immediately available for a comment when contacted by CNBC Wednesday.
Zee was reportedly unable to seek a penalty fee over the deal termination, because of the time point when Sony called off the transaction.
On Wednesday, the Indian media firm said that it “categorically refutes all claims and assertions made by Culver Max and BEPL regarding alleged breaches of the MCA by the Company, including their claims for the termination fee, and reserves all its rights in this matter.”
The company said that it is “evaluating all available options and basis the guidance received from the Board and will take all necessary steps to safeguard the long-term interests of its stakeholders, including by taking appropriate legal action.”
Zee has initiated legal action to contest Sony’s claims in arbitration proceedings to be held before the Singapore International Arbitration Center, the company said.
A merger of Zee with Sony’s India subsidiary, Culver Max Entertainment Pvt. Ltd., and its entity Bangla Entertainment Pvt. Ltd. (BEPL), would have created a potential content and entertainment powerhouse in the southeast Asian country.
Sony would have gained access to Zee’s local content, giving it a bigger footing in the lucrative Indian entertainment market. Zee, which faces intense competition at home from players like Disney and Reliance Industries, would have benefitted from the backing of Sony.
Zee said that that its terms during the negotiations included the stepdown of CEO Punit Goenka and the appointment of a board director of the merged company.
– CNBC’s Arjun Kharpal contributed to this report