India's Zee accuses Invesco of double standards in Sony merger

10/12/2021 | 04:14pm

NEW DELHI (Reuters) -India's Zee on Tuesday said top shareholder Invesco's opposition to a proposed merger of the TV network with Sony's India unit is hypocritical because the U.S. investment firm pitched a deal with similar terms earlier this year.

Invesco's "stance... runs contrary to the very deal Invesco was proposing itself a few months ago," Zee Entertainment Enterprises said in a statement, disclosing that proposal for the first time.

In February Invesco, which owns roughly 18% of Zee via two funds, tried to combine the media firm with "certain entities owned by a large Indian group" in a manoeuvre that would have allowed Zee CEO Punit Goenka to head the merged company, Zee said.

That deal would have also given Zee's founding family a higher stake of up to 8% in the new company, a move Invesco has opposed in the impending merger with Sony.

Mumbai-headquartered Zee said Invesco was pushing for the deal even though its management team found that the value of the Indian group's entities could have been blown up by at least 100 billion rupees ($1.33 billion).

Invesco, which is now calling for Goenka's ouster and a board revamp, previously wrote several letters acknowledging his "reputation, experience and capability as a professional" and also voted in favour of his re-appointment as CEO in September 2020, Zee said.

Invesco also has proposed an overhaul of Zee's board. Zee said Invesco's demands were not motivated by a desire to serve the company's business or the public interest.

Invesco did not immediately respond to a request for comment.

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.

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.

($1 = 75.4330 Indian rupees)

(Reporting by Sankalp Phartiyal; Editing by Edmund Blair, Cynthia Osterman and David Gregorio)

By Sankalp Phartiyal

© Reuters 2022
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