Report Wire - Invesco tried for merger of Zee Entertainment with massive Indian group: Punit Goenka

Report Wire

News at Another Perspective

Invesco tried for merger of Zee Entertainment with massive Indian group: Punit Goenka

3 min read
Invesco tried for merger of Zee Entertainment with large Indian group: Punit Goenka

In a brand new twist to the continued battle for the management of Zee Entertainment Enterprises Ltd (ZEEL), the corporate on Tuesday revealed that Invesco Developing Markets Fund pushed for the merger of ZEEL with a big Indian group (strategic group) as early as February this 12 months.
However, ZEEL MD and CEO Punit Goenka stated he rejected the deal citing “governance concerns”.
As per the deal offered to 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, ZEEL stated. “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 stated in an change submitting. ZEEL stated a deal was offered by Aroon Balani and Bhavtosh Vajpayee, representatives of Invesco, to Goenka in February 2021, involving the merger of the corporate and sure entities owned by the strategic group.
However, ZEEL didn’t disclose the title of the strategic group which is believed to be sturdy participant within the media and leisure enterprise. “In my view, the valuation attributed to the entities belonging to the strategic group was inflated by at least Rs 10,000 crore. When I conveyed the reasons to Balani and Vajpayee, I was told that that the deal would be consummated with or without me even though they believed that I was best suited to lead the merged company,” Goenka stated in a be aware to the ZEEL board.
“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 stated within the be aware. “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 stated.
According to Goenka, Invesco’s stance of their Open Letter, launched on Monday, that they “will firmly oppose any strategic deal structure that unfairly rewards select shareholders, such as the promoter family, at the expense of ordinary shareholders”, runs opposite to the very deal Invesco was proposing itself a number of months in the past. Invesco had final month sought an EGM for the elimination of Goenka and appoint six administrators because the take care of the strategic group apparently did not materialise.
“On account of governance concerns in relation to the deal and considering my fiduciary duties to the board and shareholders of the company, I expressed my inability to take the deal to the board and other stakeholders of the company,” Goenka stated within the be aware to the ZEEL board.
“During our discussions, in lieu of stock options, I offered that the promoter group would infuse additional cash in the merged entity against which the merged entity would issue warrants to the promoter group, at the same value which the strategic group attributed to the company,” he stated. This proposal was rejected by Invesco.
“I believe that the manner in which Invesco conducted itself leads to violations of various laws including securities laws. At an appropriate stage, various regulatory and investigating authorities may also need to be involved,” Goenka stated. Meanwhile, shares of Network18 Media and Investments jumped 20 per cent to Rs 73.05 on Tuesday amid hypothesis about an impending merger deal.