Zee Entertainment Enterprises Ltd (ZEEL) shares plunged by over 30% on Tuesday, wiping off Rs 7,285 crore from its market valuation, after Sony Pictures Networks India (SPNI) unexpectedly pulled out of their $10 billion merger deal.
ZEEL stock recorded its biggest intra-day crash after SPNI on Monday cited breaches by Zee as the reason to terminate the mega-merger announcements made last year. The sharp sell-off also dragged Zee shares to a new 52-week low.
Closing 32.73% lower at Rs 155.90 apiece on BSE, the media stock recorded its steepest fall in over two decades. The trading volumes were massive with over 22 crore Zee shares changing hands on NSE alone.
Analysts attributed the crash to the abrupt decision by Sony to walk away from the merger agreement instead of renegotiating the terms. As per reports, Sony is also seeking a $90 million break-up fee citing a violation of non-compete clauses by Zee.
The unexpected development has raised concerns over the financial health of the Subhash Chandra-led Zee Group and its ability to repay debt through strategic deals.
Meanwhile, the stock market volatility intensified amid weak global cues, with Sensex swinging over 1,500 points to finally close 1,053 points lower. Nifty finished below 21,250, down 333 points.
The meltdown in Zee shares comes months after the merger pact was signed between two of India’s biggest media groups to create an entertainment behemoth spanning digital streaming, broadcast networks, movie studios, and more.
