This most awaited mega-media deal is in the final stages. Zee Entertainment Enterprises Ltd (ZEEL) and Sony Pictures India are set to sign a binding merger agreement before Christmas within the pre-agreed 90 day time period, as per reports.
The agreement will seek to address some of the issues raised by Invesco regarding promoters holding in the merged entity. Invesco is the single largest shareholder in Zee for the 17.8 percent stake that has taken the company to the courts, over management control and other issues.
As per CLSA, rising ad-spends and a potential merger with Sony is a rerating scenario. It has Rs 415 as the target price on 18 times price to earnings and the merger with Sony could rerate Zee stock to 30 times price to earnings, but if the deal is put off then the valuation could fall to Rs 250.
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