Recently there has been a lot of tussle going on in between Zee Entertainment and Invesco (it’s largest shareholder with 17.88% stake).
- It started with Invesco requesting for an EGM to seek a major management reshuffle in mid September 2021, effectively taking the company out of promoter’s control.
- As Zee chose to ignore the request, Invesco dragged the Company to NCLT.
- In the interim Zee announced a strategic merger with Sony, even that surprisingly Invesco was not happy about and continued escalating the situation.
To an outside observer, everything was confusing and pointing out to something more complicated.
Finally, Zee decided to disclose the reason on October 12, 2021. As per the disclosure, in February Invesco was trying to facilitate a strategic deal between Zee and a large Indian Group (Invesco now confirmed that it was Reliance).
Reliance would have infused Rs 14,000 crore and held 60% in the merged entity. Zee promoters would have continued owning 3.99% and additional 4% would have been given as ESOPs totalling to about 8%. Puneet Goenka would have continued as the MD & CEO.
Puneet however rejected the deal without taking it to the Board as he claims to have not got satisfactory clarifications on his initial set of questions on the deal (neither from Reliance and nor Invesco).
It seems Invesco was very keen on the deal. It’s difficult to pin point exact reasons for the same.
However, in my mind it could be –
- Gross under performance by Zee stock price for last many years;
- Increasing competition in the Indian media industry especially from Netflix and Amazon Prime; and
- An opportunity to flip Zee’s stake into Reliance – a smart strategy
For Reliance, the deal would have given it access to Zee’s content library, a bigger presence in the Indian media and hence an enhanced offering to the Jio customers.
Everything seems to be making sense and guess the reason for the deal not going through could have been – either a sub optimal deal structuring or some sort of lack of confidence between the two business groups (Zee and Reliance).
Whatever it was, the fallout seems to have lead to the current situation. One can only hope and wish that everything falls into place (whichever way) to the comfort of all the involved stakeholders.