The Japanese entertainment giant sent a termination letter to Zee early on Monday and is expected to disclose it to the exchange later. Sony cited unmet conditions as the reason for terminating the merger with Zee, the report added.

The merger, announced over two years ago, faced challenges concerning the leadership of the combined entity, exacerbated by the Securities and Exchange Board of India (SEBI) probe into Zee chief executive officer Punit Goenka.

Why did Sony call off the $10 billion merger deal with Zee?

The termination stems from a deadlock between the companies regarding the leadership of the merged entity, particularly involving Zee’s CEO Punit Goenka, who is under investigation by capital markets regulator SEBI. This impasse has effectively derailed the deal, which aimed to establish a $10 billion media powerhouse capable of competing with global giants like Netflix Inc. and Amazon.com Inc.

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Sony’s termination letter follows the expiration of a 30-day grace period over the weekend. During this period, the two parties failed to reach an agreement on a deadline set in late December.

In June, SEBI accused the Mumbai-based media house of fabricating the recovery of loans to conceal private financing deals by its founder, Subhash Chandra. SEBI’s interim order stated that Chandra and his son, Goenka, “abused their position” and diverted funds.

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Although Goenka obtained relief from an appellate authority against the SEBI order, which barred him from holding an executive or director position in a listed company, Sony continued to perceive the ongoing probe as a looming corporate governance concern.

(Inputs from agencies)