Reliance Industries, which was proposed to merge its media properties with Zee in February, regrets being dragged into a dispute between Zee and the US investment firm Invesco. RIL revealed this in a statement after Invesco on Wednesday said Reliance had approached Zee for a merger.
Zee had said, Punit Goenka, its managing director had rejected a deal proposed by Invesco to merge the company with entities owned by an unnamed ‘large’ Indian strategic group. Lately, there has been a series of statements amid a bitter battle between Invesco and Zee’s founding family. Invesco wants to recast the board of Zee and oust Goenka. But Zee has challenged the US firm’s attempt to restructure the board in courts, and in turn accused Invesco of trying to take over India’s largest publicly-traded broadcaster at the behest of another company.
Reliance, in a statement, said differences arose between Goenka and Invesco over Zee’s founding family seeking to increase its stake by subscribing to preferential warrants. “The investors seemed to be of the view that the founders could always increase their stake through market purchases,” RIL said. Moreover, a spokesperson for Invesco said, “We wish to make clear that the potential transaction proposed by Reliance (the Strategic Group referenced but not disclosed in the 12 October 2021 communication by Zee) was negotiated by and between Reliance and Mr Goenka and others associated with Zee’s promoter family.”
Reliance Industries, in the proposed deal, had sought to control 60% of the merged entity by investing Rs 14,000 crore. An executive familiar with the development questioned Invesco’s motives. “If such a transaction was being negotiated by the promoters of Zee with Reliance executives, isn’t it the fiduciary duty on the part of the promoters of Zee to have tabled this proposal with the board of Zee? After all, the board of Zee could have looked at forming a committee to look into the proposed transaction.”
Earlier in the week, Invesco had hit out at Zee for its proposed merger with Sony Group. The US firm said the terms of the planned Zee-Sony merger announced last month give the founding family of Zee an option to ramp up their stake to 20%, from 4%, via methods that remain wholly opaque. “This lack of clarity around key aspects of the Zee-Sony announcement should concern all shareholders. We currently consider it to be no more than camouflage on the part of Zee to divert and distract from the primary issues,” Invesco said. “We will firmly oppose any strategic deal structure that unfairly rewards select shareholders, such as the promoter family, at the expense of the ordinary shareholders.”
Invesco funds own nearly 18% of Zee. It called for support from Zee shareholders for an urgent need for strengthened independence on Zee’s board.