Zee Merger update - NCLT dismisses IDBI bank plea for insolvency

This a positive for getting a timely NCLT approval for the merger, as it was the only bank pending for settlement from Zee’s NCLT approval roadblock.

We believe the NCLT merger approval could now happen even if the IDBI Bank amount isn’t settled or goes to NCLAT, management too is confident of the above; however, checks with legal experts indicate that IDBI Bank could go to NCLAT tribunal to appeal for insolvency, in case settlement is not achieved as per their agreement.

The next hearing is on 16th June; we expect the merger approval to come in by July/Aug 2023, as only 2-3 hearings may be needed, as the NCLT discussions are in final stages.

SEBI or exchanges reconsidering the approval is the only overhang for a further delay of more than 3-4 months; clarity on the same will emerge only on 16th June.

NCLT asked SEBI to reconsider the merger approval on grounds of a fraud case against the Goenka family, which was well known to Sony during diligence in FY21; an interim order was passed by NCLT on this ground to reconsider approval.

The stock has corrected 10-12% over last one month citing concerns over poor Q4FY23 and delay on merger approval; any positive implication of hearing on 16th June will augur well for near term performance. Zee Q4FY23 results are on 25th May 2023.

Further, CEO of Sony announced that the merger is expected to close in first half of FY24 (Link -