At Wednesday’s high of Rs 332.30 on BSE, Jhunjhunwala’s stake in ZEE was valued at Rs 166.15 compared with Rs 110.20 crore as on September 14.
Jhunjhunwala entered the stock when the media firm was going through a boardroom tussle between the management and its two largest shareholders Invesco Developing Markets Fund and OFI China Fund.
Invesco had called for an extraordinary general meeting seeking removal of some existing board members including CEO & MD Punit Goenka and at the same time appointing new independent directors.
On Wednesday, the company announced a merger with Sony Pictures. As part of the proposed merger, which the board of directors of ZEE approved in-principle on Tuesday night unanimously, will allow shareholders of Sony Pictures Networks India (SPN) – a step-down subsidiary of Japanese multinational conglomerate Sony Corp – to hold a majority stake in the merged entity. Punit Goenka would be the MD and CEO of the merger entity.
Hemang Jani, Equity Strategist at MOFSL, said the deal could bring in a lot of synergies given the fact that two formidable players are coming together and each one can bring its own strength and synergies in terms of costs.
“But from an investment perspective, what remains to be seen is why Punit Goenka is continuing as the MD when there was so much controversy around it and the reason why we had seen such a big spike up in ZEE earlier when there was a push by some shareholders to remove him,” Jani said.
Jinesh Joshi, research analyst at Prabhudas Lilladher, expects the merger move to result in multiple re-rating as it will not only create a large network, which will be difficult to replicate, but also absolve boardroom decision risks.
“While Punit Goenka is expected to continue as MD & CEO of the merged entity, a majority of the board of directors will be nominated by Sony. This will strengthen the board and remove oversight risks. Further, it would mark ZEEL’s entry into sports and uplift digital library (ZEE5+Sony Liv) of the combined entity,” Joshi said.
