Sony Pictures Networks India (SPN), a subsidiary of Sony Corp’s Sony Pictures Entertainment (SPE), has inked definitive agreements to merge with Zee Entertainment Enterprises (ZEE), despite the legal struggle with the media company’s major shareholder, Invesco, over control.

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When the merger was announced, Zee stated that SPN had consented to the appointment of Punit Goenka as MD and CEO of the merged firm and that this was an essential aspect of the agreement.

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As part of the planned merger, ZEE would combine with SPN, and the newly amalgamated business would be publicly listed in India when the transaction was completed.

The deal is subject to usual closing conditions, such as regulatory, shareholder, and third-party clearances.

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The board explained the rationale for the merger, saying, “The Company is inter-alia engaged in TV content development, broadcasting of regional and international entertainment satellite television channels, movies, music, and digital business. The company is one of  India’s largest entertainment networks.”

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On September 22, the two companies announced their merger. Zee and Sony had stated that they would conduct due diligence for the transaction over a 90-day timeframe. On December 21, the deadline was over.

According to the provisions of the definitive agreements, SPN will have a cash balance of $1.5 billion at closure (assuming an INR to USD ratio of 75:1), including an infusion from SPN’s present shareholders and the promoters of ZEE.

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Under the terms of the agreement, SPE will pay a non-compete fee to ZEE’s current promoters, which the promoters will use to inject primary equity capital into SPN, entitling them to purchase shares of SPN, which will eventually equal about 2.11% of the shares of the merged entity on a post-closing basis.

Following the merger, SPE will indirectly own 50.86% of the new business, while ZEE promoters would own 3.99%. Existing shareholders will own 45.15% of the merged business.

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The merger would result in India’s second-largest entertainment network by revenue, with 75 TV channels, two video streaming services (ZEE5 and Sony LIV), two film studios (Zee Studios and Sony Pictures Films India), a digital content studio (Studio NXT), and programming libraries.