Invesco Says Zee Founders Explored Deal with Reliance

(Bloomberg) -- Zee Entertainment Enterprises Ltd.’s biggest shareholder named Reliance Industries Ltd. as a firm that could help revive the television company’s fortunes, potentially making the fight for Zee a contest between Asia’s richest man Mukesh Ambani and Sony Group Corp.

The statement from Invesco Developing Markets Fund on Wednesday comes amid a bitter battle between Invesco and Zee Chief Executive Officer Punit Goenka, with the former trying to oust the latter. Zee alleges that Invesco is trying to take over India’s largest-listed TV network at the behest of another company, and Goenka has started merger talks with Sony as a white knight. Invesco says the Sony deal would enrich Zee’s founding family, which includes Goenka, and is seeking a new board.

Invesco’s decision to name Reliance comes after Zee on Tuesday said Invesco had proposed a deal to Goenka in February, involving the merger of the company with certain entities owned by an unnamed “large” Indian group. Zee said Goenka had expressed his apprehension to Invesco that the deal would cause a loss to shareholders.

While naming Reliance in its own statement Wednesday, Invesco said the potential transaction proposed by Reliance was negotiated by and between Goenka and others associated with Zee’s founders.

“The role of Invesco, as Zee’s single largest shareholder, was to help facilitate that potential transaction and nothing more,” Invesco said.

Read: Invesco Escalates War of Words with Zee, Wants Independent Board

The saga began last month, when Invesco wrote to Zee seeking a shareholder meeting to oust Goenka and other Zee board members. Both companies have since taken each other to court.

“The recent interest of Sony, as well as the previous interest of Reliance, should be a reminder to all Zee shareholders of the enormous value that lies in this company, much in contrast to its dismal performance under the current leadership and board over the last few years,” Invesco said.

Reliance confirmed that Invesco in February-March helped arrange discussions with Goenka, where Reliance said it made a “broad proposal” for merger of its media properties with Zee at fair valuations.

“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,” Reliance said in a statement. “At Reliance, we respect all founders and have never resorted to any hostile transactions. So, we did not proceed further.”

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