Tree House Education board has finally approved its revised merger deal with Zee Learn . The deal had hit a road block after Zee Learn had started 're-evaluating its merger with Tree House'. As per the new merger scheme, shareholders of Tree House will get shares in Zee Learn in ratio of 1:1. In a statement to the exchanges, Tree House said that the merger evaluation committee, formed in June by the companies, has approved of the new share swap ratio. According to the earlier deal, Tree House’s shareholders were to receive 53 fully paid equity shares of Ra 1 each of Zee Learn for every 10 fully paid equity shares of Rs 10 of Tree House. However, in June Zee Learn had said that its board meeting decided that Tree House Q4 results require careful evaluation and potential impact of the same, if any, "on the scheme of amalgamation of it with the company needs to be properly evaluated". Tree House’s net profit slumped 89 percent in FY16 to Rs 6.78 crore from Rs 60.88 crore in year-ago period. During the year, its PAT margin fell to 3.24 percent from 29.35 percent while revenue from operations stood at Rs 209.33 crore. The company reasoned that due to current economic conditions, consumer spends are weak and sluggish while bad monsoon and drought conditions in most states have worsened situation further. Commenting on the deal, JN Gupta, MD of SES told CNBC-TV18 that: “All this is not in accordance with the best governance practice.” Many issues related to accounting practices of Tree House were revealed earlier and were known to the public, he said adding that the merger does not give a good feeling about governance. The company, in December 2015, had approved of an amalgamation with Zee Learn. However, Zee Learn had put the deal on hold on back of unfavorable share swap. The companies had put in place a merger evaluation committee (MEC) to look into the deal. Both the stocks - Tree House and Zee Learn - were up 13-14 percent in early trade this morning.
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