Invesco Creating Markets Fund on Wednesday revealed that the Reliance group negotiated with 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,” Invesco mentioned.
“The role of Invesco, as Zee’s single largest shareholder, was to help facilitate that potential transaction and nothing more,” it mentioned.
ZEEL on Tuesday mentioned that Invesco pushed for the merger of ZEEL with a big Indian group (strategic group) as early as February this yr. Nevertheless, Punit 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 on 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,” Invesco 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,” Invesco mentioned. Invesco had final month sought an EGM for the elimination of Goenka and appoint six administrators because the cope with the Reliance group apparently didn’t materialise. Nevertheless, the ZEEL board then proposed a merger cope with Sony to counter the Invesco transfer.
On Tuesday, Goenka had gone on file saying that the valuation attributed to the entities belonging to the strategic group (Reliance group) was inflated by a minimum of Rs 10,000 crore.
As per the deal offered to Punit Goenka, after completion of the merger, the strategic group would have held a majority stake within the merged entity and Goenka would have been appointed because the MD&CEO of the merged entity. “Punit Goenka expressed his apprehension to Invesco that as the merging entities of the strategic group were overvalued, it would result in a loss to the stakeholders of the company,” the corporate had mentioned in an alternate submitting.
ZEEL had mentioned a deal was offered by Aroon Balani and Bhavtosh Vajpayee, representatives of Invesco, to Punit Goenka in February 2021, involving the merger of the corporate and sure entities owned by the strategic group. “Balani and Vajpayee maintained that I should have no objections to the deal for the following reasons: no dilution for the promoter group as the promoter group would get additional shares to retain its existing 3.99 per cent even in the merged entity and additional 4 per cent stake would be issued through ESOPs in the merged entity,” Goenka mentioned in a be aware to the ZEEL board.
“This would result in total promoter shareholding of 7 -8 per cent at no cost to promoter group or me and I would continue to run the business as the MD and CEO of the merged entity,” he mentioned.