Zee entertainment board has approved the execution of a non-binding term sheet with Sony Pictures for a potential merger between the two companies. To discuss the developments and the impact on Zee stock, CNBC-TV18 spoke to Amit Tandon, MD, IiAS.

Tandon said that it is an interesting development from an industry perspective.

He said the market clearly likes it because you got a large player who has come in.

"Hope is that they will bring in the checks and balances on the senior management. Going forward, they will build stronger and more robust processes, and provide supervision to the business. It is going to be an interesting period, so one must wait and watch," he added.

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According to him, there are a couple of announcements or a couple of disclosures which one needs to focus on. The first is they have said it's non-binding, and it's subject to due diligence. There have been concerns that have been raised in the past on the accounts. So, there has been a significant cleanup and one doesn't know what that leads to and whether it will have an impact on the valuation, or does it mean that Sony is going to put in less money in the combined entity rather than what they have announced at this stage.

"The second, which the market has not focused on so far is - it is going to become a significant player and therefore, what will happen with the Competition Commission, and that is not something that will happen immediately but it will play itself out over a longer period. Therefore, you know, one should always keep an eye out on what is happening over there," said Tandon.

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The third is to focus on what is there in the small print. “In the morning, we saw the announcement that the transaction has been announced. Then there was another story, which came out that to enable the merger to go through, Sony will transfer some shares it owns to Zee promoters so that their holding remains at 4 percent."

Therefore, one will have to see whether there are any more such announcements and so what is there in the small print, and whether it gets reflected in the merger ratios, or whether it gets reflected somewhere else.

For more, watch the accompanying video

(Edited by : Anshul)

First Published:Sept 22, 2021 4:12 PM IST