Zee Entertainment surged around 31 percent in trade following its board’s nod to a proposed merger with Sony Pictures.

Zee Entertainment will hold 47.07 percent, while Sony India will hold 52.93 percent stake in the merged company. Puneet Goenka will continue to provide services to the merged company as MD and CEO for a period of five years.

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Nigel D'Souza reports that the street is bracing for a potential rerating of the PE multiple though the deal appears to be done at very close to Rs 250 per share.

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Zee's total number of shares outstanding are at around 96 crore, which account for around 61 percent stake of the pre-capital infusion by Sony. This entails that the total number of shares will stand at roughly 157 crore.

After the dilution, Zee's total number of shares will stay the same at around 96 crore, but post-dilution, Zee shareholders’ stake will fall to around 47 percent. This entails that the total number of shares will stand at around 204 crore. So, the dilution is being done at approximately Rs 247 per share though the street is bracing for a rerating of the PE multiple.

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