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Invesco: Function was to facilitate potential ZEEL-Reliance deal

Invesco Creating Markets Fund on Wednesday revealed that the Reliance group negotiated with the Zee group promoter household and Punit Goenka — MD and CEO of Zee Leisure Enterprises Ltd (ZEEL) — for a takeover or merger deal for ZEEL, and admitted that its position “was to help facilitate that potential transaction and nothing more”.

“We wish to make clear that the potential transaction proposed by Reliance — the “strategic group” referenced by ZEEL however not disclosed in its October 12, 2021 communication — was negotiated by and between Reliance group and Goenka and others related to Zee’s promoter household,” it mentioned. “The role of Invesco, as Zee’s single largest shareholder, was to help facilitate that potential transaction and nothing more.”

ZEEL mentioned on Tuesday that Invesco had pushed for the merger of ZEEL with a big Indian group (strategic group) as early as this February. Nevertheless, Goenka mentioned he rejected the deal citing “governance concerns”.

“We reject in full the assertions made by Zee in its release on October 12, 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,” Invesco mentioned in a press release Wednesday.

Invesco claimed that it “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 October 12 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 ZEEL investor mentioned.

“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,” it added.

Invesco had final month sought a unprecedented basic meetint (EGM) for the elimination of Goenka and to nominate six administrators. Nevertheless, the ZEEL board then proposed a merger take care of Sony to counter the Invesco transfer.

RIL: By no means resorted to hostile transactions

Reliance Industries (RIL) mentioned Invesco assisted it in arranging discussions instantly with ZEEL MD & CEO Punit Goenka in February-March. RIL mentioned it made a broad proposal for merger, that included continuation of Goenka as MD and situation of ESOPs to administration, together with Goenka.

“However, differences arose between Goenka and Invesco with respect to a requirement of the founding family for increasing their stake by subscribing to preferential warrants,” it mentioned. “The investors seemed to be of the view that the founders could always increase their stake through market purchases. At Reliance, we respect all founders and have never resorted to any hostile transactions. So, we did not proceed further.”

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