Zee Enterment Enterprises Stock prices rose more than 2 percent in early trading on December 23 after the approval of the merger with Sony Pictures Networks India.
On December 22, Directors of Zee Enterment Enterprises Ltd. (Zeel) has approved the company’s merger with Sony Pictures Networks India (SPNI).
Punit Goenka, who will lead a joint company as Managing Director and CEO, said that the entire merger process along with approval will take eight to 10 months.
“Even though this is a positive step, there are several stages in bringing a joint company to be an existence. As for the process, we will move to the next step involving all the approval of the required regulations and shareholders,” he said during a conference call.
Goenka added that with a merger, the Zee brand will be part of the new entity and the newly joined company will decide which brand should be kept and how long.
Even on the streaming side, Goenka said that the two top platforms (OTT) ZEE5 and Sonyliv will continue to run their business independently. “We can’t gather until the merger process is complete,” he said.
SPNI will hold a majority shares of 50.86 percent in combined entities. The Zee promoters will accommodate 3.9 percent and other Zee shareholders will hold 45.15 percent of shares in the joining entity, the company said on December 22.
This is what the broker said about Stock and Post Company September Quarter Profits:
Sharekhan.
We believe the merger will strengthen the combined entity market position and help grow OTT at a faster pace by allocating growth capital towards the premium content, including exercise rights.
Next, a strong board and a proven operational track record of Mr. Goenka Puneet will increase the competitive position of the combined entity in the market, which will also encourage its income and profitability.
Zeel’s share price has given 104% over the past four months. Therefore, we maintain our purchase ranking on Zeel with a price target that has not changed Rs 400
Oswal Maleral.
The combined entity will get a strong board, along with senior management (MD at this time: Mr. Goenka) which has a very strong operational background. There is a reverse possibility of a higher entity competitive position in the market and synergy preparation, given that the two companies have significant potential to increase profitability.
At M-Cap Zee at this time, this implies the value of post-money companies of Rs 524 billion for joining entities, implying 17x EV / EBITDA on the FY20 and P / E 22x basis.
Consider the stable state of 35% EBITDA margin for linear broadcasting business, the negative value of Garners Business Ott. This can be done for big changes considering the entity war chest that is combined and the ability to invest in content to encourage growth.
We increase our ranking to buy with the target price revision RS 425 / share (on EPS 25X SEP’23E).
Citi.
The research company has maintained a buying call with a target at Rs 395 per share.
Eyes in all approval now and need to monitor how invesco oppenheimer & other key institutions choose.
CLSA.
Broking Firm has maintained a purchase rating on stock with targets at Rs 415 per share.
The merger will require some approval including 75% of Zee voter shareholders. Still in litigation with large minority shareholders, which brings relevant risks.
When a sealed agreement, the assessment tends to return to the highest historical 30x PE, he added.
Prabhudas Lilladher.
We believe this merger is a win-win situation, because it will result in material synergy (~ 6-8% most on the income side) and the growth of the driving as a combined entity will have cash ammunition of US $ 1.7 billion (including cash cash Zeel). Funds will be used to accelerate investment in the digital business and bid premium content such as sports.
Maintaining a purchase with a revised price target RS 415 (RS 399 before) assesses the stock on EPS 23X FY24 (no changes in several targets) from RS 18.1 (including the benefits of mergers’ synergy). Failure to obtain a 75% majority shareholder approval remains a major risk for our calls.
At 9:17 HRS Zee Entertainment Enterprises quoted at Rs 353.65, up Rs 4.95, or 1.42 percent in BSE.
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