on Sep 27, 2021)Mumbai: Invesco, the largest shareholder in Zee Entertainment Enterprises, is not against the company’s proposed merger with Sony Pictures Networks but wants a new board to evaluate the deal as well as decide on “future leadership”, it has said in a letter to the company’s board.
While the proposed deal allows Zee MD Punit Goenka to be in charge of the merged business, the US-based fund, which holds 18% in Zee, had sought a rejig of the company’s board including his ouster. Invesco said, “A newly constituted board supported with the strength of independence will be best suited to evaluate and oversee the potential for strategic transactions, like the one announced (with Sony), as well as to make determinations on the future leadership of the company.”
“We note that the disclosure of September 22 (the merger announcement) refers to the future board composition of the company at a time when the current composition of the board is subject to a shareholder vote on the back of our EGM requisition.” Invesco had asked Zee to call an extraordinary general meeting (EGM) of shareholders seeking removal of the company’s three non-independent directors and induction of six new independent directors on its board. Two of the non-independent directors subsequently resigned, while Goenka continued.
“We trust current board will adhere to its fiduciary duties and not violate statutory obligations to convene the EGM as requisitioned by Invesco,” said the fund. After Invesco wrote seeking EGM, the company signed a non-binding deal with Sony, which allows Goenka to be the MD of the merged entity and his family to hold up to 20% in it.
“We continue to believe that the business (Zee) is valuable, whether on its own or in strategic alignment with partners such as Sony. However, decisions of material strategic import must follow and not precede actions towards establishment of a proper and independent governance structure as determined by the company’s shareholders,” read the Invesco letter signed by VP Aroon Balani. “In this context and against the backdrop of our EGM requisition, your disclosure of September 22 is symptomatic of the erratic manner in which important and serious decisions have been handled at the company.”
When asked about Invesco’s reaction, a Zee spokesperson said, “The board is seized of the matter. The company will take necessary action as per applicable law.”
Explaining the reason for the EGM requisition, Invesco said, “Precisely to protect shareholder value and in exercise of our statutory rights as an ordinary shareholder, we have called upon the company to hold an EGM, and it is your duty under company law to now do so. At this EGM, shareholders will decide the composition of the board in a free and democratic manner.”
