Zee Entertainment has received final approval from the National Company Law Tribunal for the proposed merger, and the companies are in the final leg of completion.
The effective date of merger is not yet known, and therefore, MSCI will announce the last trading date of the stock later.
According to Nuvama Alternative & Quantitative Research, Zee stock’s final trading day may fall at the end of September or early October, and could result in potential outflows of $22 million.
Subsequently, the merged entity will relist on the exchanges within 4-7 weeks after Zee’s last trading day, placing the listing around November.
Given the significant market cap of the merged entity, a potential early inclusion of the entity in the standard index post-listing could result in inflows to the tune of $230 million, according to Nuvama.
However, assessing the impact in terms of days is currently less meaningful due to differing trading volumes of freshly listed equities, Nuvama said. Currently, Zee Entertainment is part of Nifty Midcap index, but strong post-merger price action could pave the way for the merged entity to migrate to Nifty Next 50, possibly in the March 2024 index review.
Given that Zee Entertainment is also traded in the derivatives segment, the expiry of the existing traded contracts will be announced separately by exchanges post the merger date.
According to Nuvama, the futures and options contracts of Zee Entertainment will expire on its last trading day. As per the current methodology, new derivatives will require at least six months of listing and most importantly, Sebi approval for inclusion.
So for atleast 6 months, the merged entity will not trade in the derivatives segment. On Friday, shares of Zee Entertainment ended 2.4% down on the National Stock Exchange at Rs 265.75.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
