The Zee Enterprises Ltd-Invesco squabble is hitting high notes of discord. A day after ZEEL's statement that Invesco approached it with an offer for 'merger', the latter has refuted Zee’s allegations.
Invesco group-the single largest shareholder of ZEEL, which holds 17.88 percent in Zee questioned as to why it would seek a transaction for Zee that dilutes the long-term interests of ordinary shareholders, according to a report in Moneycontrol.
On Wednesday, Invesco said it had tried to facilitate a possible deal between Reliance and the company but refuted claims it had pushed for the transaction at a lower valuation.
“Zee’s 12 October disclosure is yet another tactic to delay an EGM that will give shareholders their right under Indian law to vote for a slate of independent trustees and pave the way for a healthier future for Zee.”
The latest statement from Invesco comes a day after ZEEL chief Punit Goenka told the company's board that Invesco had come with a proposal in February for a merger with certain entities owned by a large Indian group (Strategic Group) with inflated valuation "by at least Rs 10,000 crore".
In a regulatory filing, ZEEL alleged that Invesco's stance in their open letter that they "will firmly oppose any strategic deal structure that unfairly rewards select shareholders, such as the promoter family, at the expense of ordinary shareholders" runs contrary to the very deal Invesco was proposing itself a few months ago.
Rejecting the allegations, Invesco, on Wednesday, said, "we have made various sincere efforts over the last two years to bring Zee back to good health. Discussions around strategic alignments have been just one part of this effort".
"Zee''s 12 October disclosure is yet another tactic to delay an EGM that will give shareholders their right under Indian law to vote for a slate of independent trustees and pave the way for a healthier future for Zee," it noted.
Invesco and ZEEL are locked in a legal battle over the former's demand for holding an Extraordinary General Meeting (EGM).
Invesco mentions Reliance in its statement
In a statement on Wednesday, Invesco mentioned that Reliance was the large Indian group. ZEEL, in its filing to the stock exchanges on Tuesday, had not disclosed the name of the group.
"We wish to make clear that the potential transaction proposed by Reliance (the ''Strategic Group'' referenced but not disclosed in the 12 October 2021 communication by Zee) was negotiated by and between Reliance and Mr Goenka and others associated with Zee''s promoter family," Invesco said.
The role of Invesco, as Zee's single largest shareholder, was to help facilitate that potential transaction and nothing more, it added.
"Accordingly, public securities markets have been misinformed by Invesco," it said.
Invesco reiterates confidence in Zee with an independent board
On Wednesday, Invesco again reiterated its confidence in the ability of Zee to realise its full potential with the strength of an independent board.
"The recent interest of Sony, as well as the previous interest of Reliance, should be a reminder to all Zee shareholders of the enormous value that lies in this company, much in contrast to its dismal performance under the current leadership and board over the last few years," the statement said.
Zee-Sony Pictures meger
On ZEEL's proposed deal to merge with rival Sony Picture Networks India (SPNI), Invesco said that the transaction for Zee is "dilutive to the long-term interests of ordinary shareholders" and simply defies logic.
Raising questions over the proposed deal SPNI, Invesco had said the announcement to "gift additional 2 per cent equity to the founding family via a non-compete that seems entirely unjustified while also providing a pathway for the founding family to raise its stake from 4 per cent to 20 per cent via methods that remain wholly opaque"
Invesco, which along with OFI Global China Fund LLC holds a 17.88 per cent stake in ZEEL, have been pressing for the EGM to discuss various issues, including the removal of Punit Goenka and appoint its nominees to the board.
On Monday, Invesco in an open letter to ZEEL shareholders urged them to join it in asking why the founding family, which holds under 4 percent stake, should benefit at the expense of the investors who hold the remaining 96 percent.
(With PTI inputs)
On October 12, ZEEL said Invesco, the single largest shareholder had itself come with a proposal in February this year for a merger of the company with certain entities owned by a large Indian group (Strategic Group) with inflated valuation "by at least Rs 10,000 crore".
The US fund said that it was Punit Goenka and members of the promoter family who had negotiated a potential deal with Reliance (the large Indian group which Zee did not name), according to Moneycontrol.
Stating this, ZEEL said its Managing Director and CEO Punit Goenka had informed its board about a proposal made by Invesco regarding the merger, under which Strategic Group would hold majority stake but he was offered to be appointed as MD and CEO of the merged entity besides offering 4 per cent stake.
(With inputs from Agencies)
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