Zee likely to opt for offer by financial investor for stake sale

After two nights of deliberations, promoters of Zee Entertainment Enterprises seem to be leaning towards the binding agreement from a financial investor for a partial stake sale as the transaction moves towards closure, say two people close to the development.The brass of the Essel Group, which owns Zee, have been deliberating the pros and cons of both offers. The deal is expected to close at 17-20 per cent premium over the last sixmonth average market value.Zee has received two offers for the proposed stake sale — a binding one from a financial investor for a partial stake and second non-binding one from a consortium led by US cable major Comcast and also comprising independent fund Atairos, Blackstone and James Murdoch’s Lupa Systems, for a controlling stake, including option for an open offer for an additional 26 per cent.A global media baron has played an instrumental role in stitching up the deal for the controlling play. “The offer from the consortium would have led to Chandra ceding control of Zee, whereas the binding agreement from the financial investor will allow him and Punit (Goenka, managing director and chief executive of Zee) to be in control. Naturally, they are favouring the offer from the financial investor,” said one of the persons.The identity of the financial investor could not be independently verified till press time. The other person added that the Zee promoters will most likely announce their final decision on Wednesday.70458756 A Zee spokesperson declined to share details of the offers, but added that the Essel Group has reached at “a very advanced stage” of the overall stake sale process of Zee.Last week, Goenka had told ET that the company had received one binding agreement for purchase of stake and was expecting another in the following days.While he did not disclose the identity of the bidders, he had maintained that he was expecting to sign a binding agreement by July-end.Promoters own 35.79 per cent in Zee as of June 2019, of which 63.98 per cent has been pledged with mutual funds and other financial institutions. At current market price, the promoters’ stake is worth Rs 13,103 crore (around $1.9 billion).Zee promoters will, however, have to take approval from their board and lenders before finalising any agreement.The deal will give a breather to Chandra, whose Essel Group is facing a severe debt crisis. Chandra had last year announced plans to sell half the promoters’ stake, then 41 per cent, in the company.

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