Reliance Industries Ltd (RIL) on October 13 said it “regrets” being drawn into the dispute which has erupted between Zee Entertainment Enterprises Ltd and its largest shareholder Invesco Developing Market Funds.
The company, after taking cognisance of the disclosure made by Invesco about a merger offer it had offered to Zee back in February 2021, said it had made a “fair offer” but the differences between the company’s MD and CEO Punit Goenka and Invesco scuttled the deal.
“We had made a broad proposal for merger of our media properties with Zee at fair valuations of Zee and all our properties. The valuations of Zee and our properties were arrived at based on the same parameters. The proposal sought to harness the strengths of all the merging entities and would have helped to create substantial value for all, including the shareholders of Zee,” it said.
Reliance noted that it had, as part of the offer, proposed for the continuation of Goenka as the MD of the merged entity.
“Reliance always endeavours to continue with the existing management of the investee companies and reward them for their performance,” it said.
“Accordingly, the proposal included continuation of Mr Goenka as Managing Director and issue of ESOPs to management, including Mr Goenka.”
However, differences arose between Mr Goenka and Invesco with respect to a “requirement of the founding family for increasing their stake by subscribing to preferential warrants”, the company said.
The investors seemed to be of the view that the founders could always increase their stake through market purchases, RIL said.
“At Reliance, we respect all founders and have never resorted to any hostile transactions. So, we did not proceed further,” it noted.
The statement was issued by Reliance a day after the board of Zee issued a statement, claiming that Invesco had proposed a deal to merge the company with entities linked to a “large Indian group (strategic group)” in February this year.
Zee board claimed that Goenka opposed the deal – despite being offered to head the merged entity as its MD and CEO – as the merging entities of the strategic group were being overvalued.
“The company’s management team informed the board that in their considered view, the valuation attributed to the entities belonging to the strategic group could have been inflated by at least Rs 10,000 crores,” Zee said in a regulatory filing.
While the company had not revealed the name of the strategic group, Invesco – which was accused by Zee of unilaterally agreeing to the proposed merger – revealed on October 13 that the potential deal was being negotiated with Reliance.
The US fund said that it was Goenka and members of the promoter family who had negotiated a potential deal.
“The role of Invesco, as Zee’s single largest shareholder, was to help facilitate that potential transaction and nothing more,” it said, adding that Zee’s 12 October disclosure “is yet another tactic to delay an EGM”.
Invesco, which along with OFI Global China Funds holds nearly 18 percent stake in Zee, has been seeking an extraordinary general meeting (EGM) since September 11 to push for the ouster of Goenka as the company’s MD.
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