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The Sony Group continued to hold talks with Zee Entertainment Enterprises to merge their businesses in India, the Nikkei reported on Wednesday, citing people involved in the negotiations, after media reports earlier said the Japanese company was planning to scrap the $10 billion deal.

The talks will continue until a Jan. 20 deadline to close the deal, the Nikkei reported.

Bloomberg News reported on Monday that Sony planned to file a termination notice before the deadline over an impasse on whether Zee CEO Punit Goenka, who is facing a regulatory probe, will lead the merged company.

Zee said reports of the deal falling through were "baseless and factually incorrect", and that it continued to work towards closing the deal.

Shares of Zee rose as much as 4.5% after the Nikkei report on Wednesday.

They had closed about 8% lower on Tuesday in its worst session since April 2021 on concerns about what a merger collapse would mean for the cash-strapped Indian broadcaster in a highly competitive market.

Analysts say the deal is crucial to the companies' survival amid the looming merger of local heavyweight Reliance Industries <RELI.NS> and Walt Disney's <DIS.N> Indian media and entertainment businesses.

Sony India did not immediately respond to a Reuters request for comment.

The merger, announced in 2021, was delayed after India's markets regulator last year barred Goenka from directorships of any listed company over allegations that he was involved in diverting company funds, although a tribunal lifted the ban in October.