In an escalation of tussle over the Sony-Zee merger, Zee Entertainment Enterprises Ltd.'s (ZEEL) largest shareholder Invesco has refuted allegations made by ZEEL's MD and CEO Punit Goenka that it had reached out to him in February this year with a proposal to merge Zee with certain entities owned by a "large Indian group."
In a statement released on Wednesday, Invesco stated that the assertion "simply defies logic."
"We reject in full the assertions made by Zee in its release on 12 October 2021. We specifically note that the implication that we as a shareholder would seek out a transaction for Zee that is dilutive to the long-term interests of ordinary shareholders, including ourselves, simply defies logic," the statement read.
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Zee Entertainment Enterprises Ltd (ZEEL) on Tuesday alleged that Invesco had itself come with a proposal in February this year for a merger of the company and certain entities owned by a large Indian group (Strategic Group) with inflated valuation "by at least Rs 10,000 crore".
Responding to the allegation, Invesco further stated, "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."
"The role of Invesco, as Zee's single largest shareholder, was to help facilitate that potential transaction and nothing more," it added.
Also Read: Invesco asks ZEEL shareholders to support its EGM for change of board
Invesco said in the statement that it has made several efforts over the last two years to bring Zee back to good health and that discussions around strategic alignments have been just one part of its effort. It noted that Zee's October 12 disclosure is "yet another tactic to delay and 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.
Invesco has put forward its reservations to some of the terms of the Sony deal that Zee's founding family, comprising Goenka, an option to up their stake to 20% from the present 4% in an "opaque" manner that would prove to be disadvantageous for other shareholders.
Invesco along with OFI Global China Fund LLC holds a 17.88 per cent stake in ZEEL and has been pressing for an Extraordinary General Meeting (EGM) to discuss various issues, including the removal of MD Goenka and appoint its nominees of the board of the company.