Zee stock: Zee stock plummets following reports of Sony deal cancellation
“We would like to reiterate that the company remains committed to the merger with Sony and remains committed to successfully concluding the proposed merger,” the company clarified to the exchange.
Zee shares, which slumped as much as 12.6% this morning, pared some of their earlier losses to ₹256.30 on the NSE.
Analysts recommend investors with higher risk appetite to consider buying the stock after the recent sell-off as they expect the deal to go through. The stock price fell 10.5% last month.
“This deal is likely to go through as it is beneficial for both parties,” said Jinesh Joshi, midcap institutional equity analyst at brokerage Prabhudas Lilladher.
The proposed merger of Zee Entertainment and Sony, announced in September 2021, would have created the country’s largest broadcaster worth $10 billion.
As per the original contract, Punit Goenka was set to lead the company, but Sony reportedly later objected to this after the Securities and Exchange Board of India banned Goenka from holding the position of an officer or director. “Currently, differences of opinion on the CEO candidate can be resolved through mutual agreement,” Joshi said. For analysts, if the deal doesn’t go through, Zee Entertainment’s stock will be an outright ‘sell’. “It will be unfortunate and negative for both ZEE and Sony if the deal does not go through as Reliance and Viacom are likely to get the deal and both companies will be smaller,” said Abneesh Roy, managing director, Nuvama Institutional Equities. .
But investors looking to buy shares at current levels should consider the risks involved if the deal doesn’t go through, he said.
Positioning of Zee stock options shows that open interest is currently highest at ₹300 and ₹290 calls in the series, indicating that the stock may face resistance at these levels. Immediate support for the stock is likely to be at ₹250, followed by ₹230 if the positions taken in Put options continue.
