Opponent Invesco supports the Zee-Sony merger deal and decides not to pursue legal battles
At last, media baron and Zee TV’s promoter, Subhash Chandra has had the last laugh. On Thursday, the main opponent and largest shareholder investment firm Invesco Developing Markets Fund decided to support the Zee-Sony merger plan. Invesco also decided not to pursue legal battles for calling Extraordinary General Meeting and appointing Independent Directors in Zee Entertainment Enterprises. The investing firm was conducting legal battles to remove Managing Director and CEO Punit Goenka, son of Subhash Chandra, and two independent directors.
Subhash Chandra sensed the first victory when Mukesh Ambani’s Reliance Group decided to call for an Rs.10,000 crore worth deal to take over the plan and supported the continuation of legacy in Zee Group. For the past few years, Zee Group was cash-strapped and facing financial problems and many were in talks for taking over Zee Group, the premier in India’s television sector. In the media industry, there were talks about industrialist Gautam Adani being in talks for the takeover of Subhash Chandra founded Zee TV Group. But still, the unanswered question is who is behind Invesco which rattled Chandra.[1]
Invesco’s blessing
The company said it will support the merger of Zee and Sony, contending the “deal in its current form has great potential for Zee shareholders” but added if it is not completed as currently proposed, Invesco retains the right to requisition a fresh EGM. Two days after the Bombay High Court ruled that Invesco’s call for EGM was legally valid, the investment firm in a statement said, “Since we announced our intention to requisition an EGM and add six independent directors to Zee’s Board of Directors, Zee has entered into a merger agreement with Sony. We continue to believe this deal in its current form has great potential for Zee shareholders.”
“We also recognize that following the merger’s consummation, the board of the newly combined company will be substantially reconstituted, which will achieve our objective of strengthening board oversight of the company. Given these developments, and our desire to facilitate the transaction, we have decided not to pursue the EGM as per our requisition dated September 11, 2021,” it added.
Last year in December, Sony Pictures Networks India Pvt Ltd (SPNI) and Zee Entertainment Enterprises Ltd (ZEEL) signed definitive agreements for the merger of ZEEL into SPNI following the conclusion of an exclusive negotiation period during which both parties conducted mutual due diligence. At that time Invesco along with OFI Global China Fund LLC, which together hold about a 17.9 percent stake in ZEEL, had opposed the deal.
When the merger deal was announced in September 2021, the two networks had stated that Sony would invest USD 1.575 billion and hold a 52.93 percent stake in the merged entity, while Zee will have the remaining 47.07 percent. ZEEL’s chief executive Punit Goenka will lead the combined company as its Managing Director & CEO.
When it is completed, Sony Pictures Entertainment Inc will indirectly hold a majority of 50.86 percent of the combined company and the promoters (founders) of ZEEL will hold 3.99 percent, while the other ZEEL shareholders will hold a 45.15 percent stake. Two investment firms — Invesco Developing Markets Fund (formerly Invesco Oppenheimer Developing Markets Fund) and OFI Global China Fund LLC, which together hold 17.88 percent stake in ZEEL — had last year sought an EGM to remove Goenka and two independent directors Manish Chokhani and Ashok Kurien.
Invesco had opposed the merger plan with Sony, terming the development as symptomatic of the company’s erratic manner of handling important and serious decisions. In July 2019, Subhash Chandra-led Essel Group had roped in existing investor Invesco Oppenheimer to raise its stake in flagship Zee Entertainment Enterprises by another 11 percent for Rs.4,224 crore.
But now Subhash Chadra had the last laugh by controlling the Zee Group, by sidelining the warring largest shareholder. In a nutshell, veteran Subhash Chandra who knew well about all kinds of ‘Indian Jugad’ won in the game with faceless foreign investor firms.
Reference:
[1] Mukesh Ambani’s Reliance says dropped Rs.10,000 crore merger or acquisition plans with Subhash Chandra led Zee Group. – Oct 13, 2021, PGurus.com
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