Zee stock: Zee stock plunges on reports of Sony deal cancellation

“We wish to reiterate that the company is committed to the merger with Sony and is continuing to work towards a successful closure of the proposed merger,” it said in a clarification to the exchanges.

Zee shares, which tumbled as much as 12.6% earlier in the day, cut some of the earlier losses to close at ₹256.30 on the NSE.

Analysts recommend investors with a higher risk appetite to consider buying the shares after the recent sell-off as they expect the deal to go through. The stock is down 10.5% in the past month.

“There is a high possibility that the deal will go through because it is in the interest of both the parties,” said Jinesh Joshi, analyst, institutional equities – midcaps of brokerage Prabhudas Lilladher.

The proposed merger of Zee Entertainment with Sony, announced in September 2021, was set to create the country’s largest broadcast company worth $10 billion.

While Punit Goenka was set to helm the company as per the original agreement, Sony is said to have opposed this later after the Securities and Exchange Board of India’s ban on Goenka from holding executive or directorial positions. “The current disagreement on CEO candidature can be resolved with mutual agreement,” Joshi said.For analysts, shares of Zee Entertainment will become an outright ‘sell’ if the deal does not materialize. “It will be unfortunate and negative for both ZEE and Sony if the deal doesn’t happen, as both will become small given Reliance and Viacom are likely to have a deal,” said Abneesh Roy, executive director, Nuvama Institutional Equities.

Investors who are looking to buy the shares at the current levels, though, must take into account the risk associated if the deal does not go through, he said.

Positioning in Zee stock options showed the highest open interest was at the ₹300 and ₹290 Calls in the current series, indicating that the stock could face resistance at these levels. Immediate support for the stock is likely at ₹250, followed by ₹230, if the positions taken in its Put options are to go by.