Invesco reveals it proposed Zee’s merger with Reliance, suggests that the company left money on the table in Sony merger

• In the latest round of back and forth between Zee and its investor Invesco, the latter has revealed that it had proposed a merger with Reliance.
• Invesco also hinted that the interest shown by Sony and Reliance in Zee suggests that the Punit Goenka-led company left money on the table in its merger with Sony.
• Zee’s founder Subhash Chandra Goenka had earlier expressed doubt about Invesco’s intentions, asking if it had cut a deal with another company.

The Zee-Invesco brawl continues to intensify, with the investment fund hitting back that it had proposed a strategic merger of Zee with Reliance Industries, which also owns media and entertainment properties.

In its latest salvo, Invesco hinted that Zee Entertainment left money on the table in its merger with Sony Pictures Networks, which was announced in September.

This response comes after Zee Entertainment’s Managing Director and Chief Executive Officer Punit Goenka alleged that Invesco’s deal would have led to a loss of ₹10,000 crore for the shareholders of the company.

Invesco also revealed that the Zee-Reliance merger talks involved Punit Goenka, shedding new light on the matter.

Update 1: According to media reports, the Bombay High Court has asked Invesco and OFI Global China Fund to file an affidavit by October 20. The next hearing in the Zee-Invesco case is scheduled for October 21.

“We wish to make clear that the potential transaction proposed by Reliance (the ‘strategic group’ referenced but not disclosed in the October 12 communication by Zee) was negotiated by and between Reliance and Goenka and others associated with ZEE’s promoter family. The role of Invesco, as ZEE’s single largest shareholder, was to help facilitate that potential transaction and nothing more,” Invesco said in a statement, according to The Economic Times.

Update 2: Reliance Industries has issued a statement clarifying that Invesco approached it to facilitate discussions with Zee’s Punit Goenka.

“We had made a broad proposal for merger of our media properties with Zee at fair valuations of Zee and all our properties,” the company said in a statement, noting that it prefers to continue with the existing management of companies it acquires or merges its properties with.

Further, the Reliance statement also reveals that differences arose between Invesco and the Goenka family with regards to the founders - the Goenka family - increasing their stake in Zee via preferential warrants. This, Reliance says, forced it to withdraw from the merger talks.

Earlier last week, Zee Entertainment and Essel Group’s founder Subhash Chandra Goenka had cast aspersions on the intentions of Invesco, asking if they had cut a deal with another company.


“Have you done any deal with someone? The 6 directors given by them - what's their background? Do they have any relation with any particular company that wants to take over? Hence, Invesco should come out transparently and openly, and let the shareholders decide,” Chandra said.

In the video, he also revealed that two other media outlets did not want to take him up on his offer for the video linked above, and wondered if they had a vested interest in doing so. It is worth noting that the media outlets mentioned by Subhash Chandra are owned by Reliance Industries.

What Sony is getting from the Zee-Sony merger

According to the specifics of the deal announced by Sony Pictures Networks, it will be the majority shareholder in the merged entity, with a stake of 52.93%, while Zee shareholders will hold a 47.07% stake.

Sony Pictures will also infuse $1.6 billion (approx. ₹12,000 crore) in the merged entity to fund its future growth.

In contrast, Zee Entertainment revealed that Invesco’s proposal would value the shareholding at ₹21,129 crore, at a price of ₹220 per share. In comparison, at the time of the announcement of Zee-Sony merger, Zee’s shares were trading at ₹337 (September 22), and as of 10:10 a.m. today, at ₹315.

At current prices, Zee’s market capitalisation stands at ₹30,314 crore, while the Invesco proposal valued it at ₹21,172 crore, a difference of over ₹9,000 crore.

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