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Reliance Industries came out in the open for the first time acknowledging that it was interested in merging its media businesses with Zee Entertainment but did not proceed due to the differences between Invesco and Punit Goenka over Zee promoter group’s shareholding in the proposed merged entity.
RIL was forced to make its stand public after Goenka on Tuesday claimed that Invesco wanted Zee to merge with Reliance’s media business even though the offer undervalued his company.
Value for all
Countering this, RIL said 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. “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,” a Reliance statement said.
“However, differences arose between Goenka and Invesco with respect to a requirement of the founding family for increasing their 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.
“At Reliance, we respect all founders and have never resorted to any hostile transactions. So, we did not proceed further,” it added.
Facilitated the deal: Invesco
Earlier in the day Invesco disclosed that the deal with RIL was negotiated by Goenka himself. “The role of Invesco, as Zee’s single largest shareholder, was to help facilitate that potential transaction and nothing more,” Invesco said in a press statement. On Tuesday Goenka had alleged that Invesco was pushing for the deal with Reliance despite being negative for Zee shareholders. Invesco said that it rejects in full the assertions made by Zee. “We specifically note that the implication that we as a shareholder would seek out a transaction for Zee that is dilutive to the long-term interests of ordinary shareholders, including ourselves, simply defies logic,” it said. This comes even as Goenka is pushing for a deal with Sony Pictures. Sony has agreed to merge with Zee allowing Goenka to continue as the CEO of the combined entity.
EGM: Zee to reply by Oct 20
Meanwhile, the dispute between Goenka and Invesco over holding an extraordinary general meeting was taken up by the Bombay High Court on Wednesday. The court has asked Invesco to respond to Zee’s petition by October 20.
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