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Zee Entertainment Shares Jump 20% After Invesco Drops EGM Demand

Invesco, however, said if merger with Sony is not completed as currently proposed, it retains the right to requisition a fresh EGM

<div class="paragraphs"><p>Zee Entertainment channels. (Source: BloombergQuint)</p></div>
Zee Entertainment channels. (Source: BloombergQuint)

Shares of Zee Entertainment Enterprises Ltd. gained the most in about six months after its largest shareholder decided not to pursue an extraordinary general meeting demanding an independent board in the broadcaster.

Invesco publicly expressed support for Zee Entertainment's proposed merger with Sony Pictures Networks India Pvt. and said it would achieve the same objective as the EGM.

“We continue to believe this deal in its current form has great potential for Zee shareholders,” Invesco Developing Markets Fund said in a statement. “Following the merger’s consummation, the board of the newly combined company will be substantially reconstituted, which will achieve our objective of strengthening board oversight of the company.”

Invesco, which along with OFI Global China Fund holds a 17.88% stake in Zee Entertainment, however, said if the merger with Sony India is not completed as currently proposed, it retains the right to requisition a fresh EGM.

Reacting to the development, shares of Zee Entertainment jumped as much as 20% as of 10:20 a.m. on Thursday, compared with a flat Nifty 50.

Zee Entertainment Shares Jump 20% After Invesco Drops EGM Demand

Invesco’s decision comes a day after the Bombay High Court allowed its appeal against a single-judge order that had granted an injunction in favour of Zee Entertainment restricting the U.S. fund to act on its requisition to call an EGM.

Invesco and OFI Global have been locked in a dispute with Zee Entertainment’s current board and Managing Director and Chief Executive Officer Punit Goenka. The two funds were seeking to oust Goenka and appoint six new independent directors via an EGM.

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In December, Zee Entertainment had finalised the terms of the merger with Sony. According to the agreement, Sony Pictures Networks will own a 50.86% stake in the merged entity, while Essel Holdings Ltd.—a Zee promoter entity—will own 3.99%. Public shareholders will own 45.15%.

In a statement today, Zee Entertainment said it welcomed Invesco's support of the proposed merger with Sony India and was taking steps to seek all regulatory approvals to complete the transaction.