After Sony-Zee $10 Million merger deal collapses, Zee shares crashes by 27.71%
Zee's stock is undergoing its worst trading period after its deal with Sony collapsed, with its shares priced at Rs 160.90 at 6:40PM
Competition can deter serious businesses from the top of the ladder, and this is precisely what occurred with Zee Entertainment Enterprises. Following the scrapping of the $10 billion merger deal by the Sony Group, Zee’s shares plummeted by 27.71% to Rs. 169.85 on the Bombay Stock Exchange (BSE), marking a nearly 30% decline. Market expert Vivekanand Subbaraman, an analyst at brokerage Ambit Capital, informed Reuters that Zee’s troubles with business upscaling could result in the loss of its number 2 position.
He added, “The challenge that Zee is facing is that the TV business has been declining at a fairly fast pace — its fiscal 2023 ad revenue is still 22% below 2019 levels.”
Officials attribute the collapse of the deal to unmet expectations. Earlier, Zee Entertainment Enterprise shares hit a 52-week low of Rs 162.25. Currently, the stock is undergoing its worst trading period, with shares priced at Rs 160.90 at 6:40 PM.
What Were the Earlier Analyst Predictions?
More than seven analysts predicted this downfall, advising investors to sell their Zee stock. As a result of today’s crash, Zee has lost over 800 million in market value, according to the Reuters agency.
The Merger was to Face Rising Competition
With the recent Reliance and Disney deal, this Zee merger with Culver Max Entertainment India (Sony India) was seen as an important event for the rest of the entertainment industry. It was an important deal for the financial health as they were looking to upgrade its services.
With the company already facing a shortage in its profit, cash reserves, and advertising, the scraping of this 2-year $10 Million deal will make things harder .
Zee’s Share Prices & Profits Over the Last Few Years
Zee’s profit declined by 68%, and cash reserves were down by 40% in the first six months of the current financial year. When the merger was announced in September 2021, Zee’s stock was down by 35%. In 2024, its share further crashed by 41% amid uncertainty surrounding the deal. On Monday, Zee’s shares were valued at Rs 169.85 a piece in the afternoon, a further decline nearing 30% when Sony called off the deal. A latest price shows Zee being priced at Rs 160.90 as of 6:40 PM.
The LSEG data mentioned in a Reuters report indicates that the average rating from 19 analysts covering Zee has shifted from ‘buy’ to ‘hold.’ Furthermore, the overall median target price has dropped by 16%, now at Rs 253.
Should Investors Buy or Sell Zee Stocks?
Analysts have varying opinions. Some predict that stocks will fall further to Rs. 150, while others anticipate the stock will trade between Rs 170-340 apiece in the medium to long term.
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