Invesco to not pursue Zee MD’s removal, citesZee-Sonymerger
Merged entity will be India’s second-largest entertainment network by revenue
NEW DELHI: Investment firm Invesco Developing Markets Fund, the largest shareholder in Zee Entertainment Enterprises Ltd (ZEEL), said it will support the Zee-Sony merger deal and has decided not to pursue the call for a ZEEL EGM to remove managing director (MD) and chief executive officer (CEO) Punit Goenka and two independent directors.
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 proposed, Invesco retains the right to requisition a fresh EGM.
Two days after Bombay High Court ruled that Invesco’s call for EGM was legally valid, the investment firm 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 recognise 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 said.
In December, Sony Pictures Networks India Pvt Ltd (SPNI) and 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% stake in ZEEL, had opposed the deal.
When the merger deal was announced in September 2021, the two networks had contended that Sony would invest as much as $1.575 billion and hold a 52.93% stake in the merged entity, while Zee will have the remaining 47.07%.
Under the terms of the definitive agreements, SPNI will have a cash balance of $1.5 billion at closing, including through infusion by the current shareholders of SPNI and the promoter founders of ZEEL.
Goenka will lead the combined company as MD and CEO.
The merged entity will become India’s second-largest entertainment network by revenue with 75 TV channels and two video streaming services, ZEE5 and Sony LIV. It will also house two film studios, Zee Studios and Sony Pictures Films India and a digital content studio (Studio NXT).
Sony Pictures Entertainment
Inc will indirectly hold a majority of 50.86% of the combined company and the promoters (founders) of ZEEL will hold 3.99%, while the other ZEEL shareholders will hold a 45.15% 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 per cent stake in ZEEL, had last year sought an EGM to remove Goenka and independent directors Manish Chokhani and Ashok Kurien.
The investment firms had also sought the appointment of six of their own nominees, Surendra Singh Sirohi, Naina Krishna Murthy, Rohan Dhamija, Aruna Sharma, Srinivasa Rao Addepalli and Gaurav Mehta, on the board of the company.
Invesco had opposed the merger plan with Sony, terming the development as symptomatic of the company’s erratic handling of 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 ZEEL by 11% for Rs4,224 crore.