Invesco backs Zee-Sony merger deal
Not to pursue EGM call to remove ZEEL MD, independent dirs; However, Invesco cautions that if it is not completed as currently proposed, it’ll retain the right to requisition a fresh EGM; Zee Ent shares jump 17%; mcap up Rs4,139.83 cr
image for illustrative purpose
Deal to create mega network
• Last year in Dec, SPNI and ZEEL signed definitive agreements for the merger of ZEEL into SPNI
• At that time Invesco along with OFI Global China Fund LLC, which together hold about a 17.9% stake in ZEEL, had opposed the deal.
• When the merger deal was announced in Sept 2021, the two networks had stated that Sony would invest $1.575 bn and hold a 52.93% stake in the merged entity, while Zee will have the remaining 47.07%
New Delhi: Investment firm Invesco Developing Markets Fund, the largest shareholder in Zee Entertainment Enterprises, on Thursday said it will support the Zee-Sony merger deal and has decided not to pursue the call for ZEEL EGM to remove Managing Director and CEO Punit Goenka and two independent directors. Zee Entertainment Enterprises Ltd (ZEEL) has also welcomed the move and said it continues to seek the required valuable support from all its stakeholders. Invesco said it will "support the merger of Zee and Sony, contending the deal in its current form has great potential for Zee shareholders," but added if it is not completed as currently proposed, Invesco retains the right to requisition a fresh EGM.
Two days after the Bombay High Court ruled that Invesco's call for EGM was legally valid, the investment firm in a statement said, "Since we announced our intention to requisition an EGM and add six independent directors to Zee's Board of Directors, Zee has entered into a merger agreement with Sony. We continue to believe this deal in its current form has great potential for Zee shareholders". "We also recognise that following the merger's consummation, the board of the newly combined company will be substantially reconstituted, which will achieve our objective of strengthening board oversight of the company. Given these developments, and our desire to facilitate the transaction, we have decided not to pursue the EGM as per our requisition dated September 11, 2021," it added.
Shares of Zee Entertainment Enterprises on Thursday rallied nearly 17 per cent after Invesco Developing Markets Fund, the largest shareholder in the company, said it will support the Zee-Sony merger deal.
The stock jumped 16.83 per cent to settle at Rs 299.15 on BSE. During the day, it zoomed 19.99 per cent to Rs 307.25. On NSE, it rallied 16.89 per cent to close at Rs 299.30. Its market valuation jumped Rs 4,139.83 crore to Rs 28,733.83 crore on BSE. In volume terms, 41.16 lakh shares were traded on BSE and over 8.67 crore on NSE.
Invesco said it will "continue to monitor the proposed merger's progress. If the merger is not completed as currently proposed, Invesco retains the right to requisition a fresh EGM". Commenting over the development, the leading entertainment major in a statement said it welcomes the decision by Invesco Developing Markets Fund and OFI Global China Fund LLC "for its belief in the true potential of the proposed merger with Sony Pictures Networks India (SPNI) and for its faith in the management's approach". "As the company takes the required steps forward in seeking all the regulatory approvals as mandated by law to complete the proposed merger, it continues to seek the required valuable support from all its stakeholders," it said. Invesco has been an integral part of ZEE's value-creation journey for almost two decades and the company acknowledges this support, it added. "Under the able guidance of its esteemed Board and the strategic approach undertaken by its management, the Company remains focused on the completion of the proposed merger with SPNI, which is in the best interest of all the stakeholders," said ZEEL. Last year in December, SPNI and ZEEL signed definitive agreements for the merger of ZEEL into SPNI following the conclusion of an exclusive negotiation period during which both parties conducted mutual due diligence. At that time Invesco along with OFI Global China Fund LLC, which together hold about a 17.9 per cent stake in ZEEL, had opposed the deal. When the merger deal was announced in September 2021, the two networks had stated that Sony would invest $1.575 billion and hold a 52.93 per cent stake in the merged entity, while Zee will have the remaining 47.07 per cent.
