The National Company Law Tribunal (NCLT) approving the merger of Zee Entertainment Enterprises Ltd (ZEEL) and Culver Max Entertainment (erstwhile Sony Pictures Networks India or SPNI) is a major shot in the arm for Zee, also dismissing all related objections, analysts say.

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The order will be uploaded on the website by Friday, NCLT said. The bench had reserved the order on 10 July.

Zee will now make a filing with Registrar Of Companies (ROC) after 30 days of receiving the order and MIB vetting are next steps. Post this, the stock will be delisted for six weeks and the merged company will be relisted.

Foreign brokerage CLSA remains positive on the merger with Zee’s valuation compelling at 16 times PE (price-earnings) for FY25CL. CLSA has a 'Buy' rating on the counter, with a target of Rs 300 per share. This implies an upside potential of up to 6 percent from the current market levels.

Analysts now await the detailed judgment for ascertaining details. "Necessary approvals from stock exchanges and CCI have already been received. With Punit Goenka’s case with Sebi still ongoing, the issue of who will be at the helm of the merged entity persists," brokerage Emkay said in a note.

Sebi is expected to give its final order in the matter on Monday, 14 August. If Goenka gets relief from Sebi, it will ensure his position as the MD and CEO of the second-largest entertainment network in the country.

While the two firms are yet to issue a statement on when the merger is expected to be completed, merger and acquisition experts feel that it should be done by mid-November.

According to corporate lawyer HP Ranina, there is no reason why this merger will not go through. Ranina expects the merger to be completed in the next 3-4 months.

"The important point is that the main structure of the deal has been approved, all the stakeholders have approved it, more than 99 percent of the shareholders have approved it," he said while speaking to CNBC-TV18.

Emkay believes that promoters' proceedings are unlikely to derail the merger.

Emkay has remove its merger-uncertainty discount of 10 percent, to arrive at a revised target price of Rs 335 per share, suggesting a further upside of 18 percent.

Zee shares jumped 18 percent in late-afternoon trade on August 10 after the NCLT approved the mega merger. The stock closed 17.95 percent up at Rs 285.55 on the BSE on Thursday.

"We reinstate our previous targeted EV/ EBITDA (broadcasting) of 9.5 times (from 8 times), with merger completion now in sight and improving business outlook," the note stated.

Sony will own a 50.86 percent stake in the merged entity while Zee’s founders will own 3.99 percent, according to an exchange filing earlier. Public shareholders will have the remaining 45.15 percent as part of the definitive agreement.

The merged entity will have $1.5 billion in cash after closing.

The mega merger was announced in 2021 but has been delayed for multiple reasons. The merger was initially held up by a courtroom feud between Zee’s founders and its largest shareholder, then subsequently by an insolvency case filed against Zee that was halted in February.

First Published:Aug 11, 2023 9:44 AM IST