The Zee board gave its nod to a proposed merger with Sony Pictures, the company said in an exchange filing on Wednesday. The latter has promised a further infusion of $1.6 billion for control and to drive growth. Experts believe the merger can address governance and growth concerns.

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Though it is not binding, Zee Entertainment and Sony Pictures Networks India Private Limited have agreed to an exclusivity period of 90 days. Perhaps, a deal will be consummated at the end of it. The stock, meanwhile, is reacting in an extremely positive way.

R Gopalan, Chairman, Zee Entertainment said, “We have been focusing our energies on this deal. So we are working on how to get this deal going through. These are the primary stages, what we have discussed with Sony, there is a lot of other due diligence, and the process has to go on. So it will take its own time, it has its own calendar. There are processes, which include involving shareholders.”

Read Here: Here's a look at Zee Entertainment's valuations after its deal with Sony

Gopalan added that the board is seized of the EGM matter and that there is a due process of law, which it will follow.

On working out on valuation Gopalan said, “The basis of the valuation is we go through the process of mainly EPS, and all those calculations are looked in to, the cohort which is there in this particular area, in this particular set of company, that data is taken into account,”

He added that the deals in the communication sector over a period of time have also been taken into account.

Speaking about future ETF expectations, he said after taking into account all the factors, the company arrives at the ratio, which has to be based on enterprise value. “Some ratio has been worked out, cash infusion is taken into account after which ratio undergoes some changes,” he added.

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On digital strategy, Gopalan said, there is a clear objective that OTT assets, both in content and in operations, have to be used in a way that the shareholder value is maximised and a broad principle under this is being worked out. He added, “It is too early to make any comments on the kind of strategy or operational details.”

Zee Chairman said promoters are not being paid out of the resources of the combined entity. “They are being paid separately by Sony from its own resources,” he said.

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He added that the firm has come up with a structure, which is good for the shareholders of both companies. “Now, we will have to see how the acceptance is among the shareholders. From our understanding, we think that the deal is good but the shareholders will have to decide whether it is good,” he said

For the full interview, watch the accompanying video...

(Edited by : Kanishka Sarkar)