“Zee Learn Ltd will not be going ahead with the currently agreed share exchange ratio of 53 fully paid equity shares of Rs 1 each of Zee Learn Limited for 10 fully paid equity shares of Rs 10 each of Tree House,” the company said in a statement to Bombay Stock Exchange.
Zee Learn added that it will re-constitute the merger evaluation committee to look into and suggest ways to salvage the deal with Tree House.
Meanwhile Tree House shares fell 2.5 per cent. The stock has slumped 23 per cent over the last one week as compared to over 6 per cent gain in Zee Learn shares during the same period. Tree House shares are down over 80 per cent in the last one year, leading to huge destruction of shareholders’ wealth.
“Tree House is down 80 per cent from the peak and the selloff in the stock is a good example for retail investors… The company’s March quarter numbers were disappointing and their numbers do not reflect the business on the ground. Zee Learn will benefit if the merger does not go through,” said G Chokkalingam, founder of Equinomics Research & Advisory.
Zee Learn runs around 1,600 pre-schools, while Tree House operates around 700 centres across the country.
As of 11.26 a.m., Zee House shares traded 3.3 per cent higher at Rs 29.85, while Tree House shares were down 2.3 per cent at Rs 57.75. In contrast, the broader Nifty traded 0.2 per cent lower.