Mumbai: Zee Entertainment Enterprises Ltd (Zeel) witnessed the share price gain by 20 per cent on Thursday, after its largest shareholder Invesco Developing Markets Fund decided not to pursue corporate action against the company.
The tussle between the company and its shareholder came to a climax on Tuesday after the Bombay high court upheld Invesco’s requisition for an extraordinary general meeting of Zee’s board as legally valid. Soon after, Invesco declared that it would cease to pursue the EGM and that the HC ruling was an important reaffirmation of “shareholder rights.”
Zeel’s management and Invesco have been engaged in a legal battle for control of the company’s board since October 2021. However, Invesco has reversed gears amidst the ongoing Zeel-Sony merger transaction that is taking place. When completed, this will be the biggest M&E acquisition in the country.
Zeel and Sony Pictures Networks India had signed definitive agreements to merge in December. Once the merger is completed, Sony Pictures Entertainment, the parent of SPN India, will indirectly hold a majority 50.86 per cent of the combined entity and the promoters of Zeel will hold 3.99 per cent. Other shareholders will hold a 45.15 per cent stake. Zeel MD and CEO Punit Goenka will take on the role of MD and CEO of the combined entity for the next five years.
“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,” said Invesco, commenting on the deal. “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.”
The Zeel-Invesco dispute began when the media company’s top two investors Invesco Developing Markets Fund and OFI Global China Fund LLC, with a combined stake of ~18 per cent stake in the Zeel, sent a requisition notice to the board on 11 September 2021, calling for an EGM.
The investors sought the removal of long-standing directors and close associates of the promoters from the board following which two independent directors Ashok Kurien and Manish Chokhani submitted their resignations. Invesco also sought the removal of Punit Goenka.