Invesco, the top shareholder in Zee Entertainment Enterprises (ZEEL), on Wednesday rejected allegations made by the media company about its proposed merger with Sony's India unit, saying the statements "defy logic".
ZEEL said yesterday Invesco had approached Punit Goenka, its managing director and chief executive officer, with a merger proposal in February on behalf of a rival company, part of a large Indian business group, which, if accepted, would have led to a loss of Rs 10,000 crore for the company's shareholders.
Responding to that, Invesco said in a statement: "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."
"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,” said the US investment firm.
Invesco has objected to some terms of the Sony deal that give Zee's founding family, including Goenka, an option to increase their stake to 20% from the current 4% in an "opaque" manner that would disadvantage other shareholders, Reuters reported on Tuesday.
Invesco's opposition clouds prospects for the Sony deal, which prompted a sharp rise in Zee's share price when it was announced in September. As part of the deal, Sony India would control about 53% of the merged company.