Reliance had courted Zeel for media business transaction, says Invesco

Mumbai: Invesco Developing Markets Fund on Wednesday stated that Reliance Industries had made an offer to Zee Entertainment Enterprises Ltd (Zeel) to merge its media business, a deal which was struck down by Zeel’s managing director and chief executive officer Punit Goenka at the beginning of the year.

According to a statement by the investor, “the potential transaction proposed by Reliance (the 'Strategic Group' referenced but not disclosed in the 12 October communication by Zeel) was negotiated by and between Reliance and Goenka and others associated with Zeel’s promoter family. The role of Invesco, as Zeel’s single largest shareholder, was to help facilitate that potential transaction and nothing more.”

Invesco rejected Zeel’s assertion in the 12 October release that the former would seek out a transaction for Zeel that is dilutive to the long-term interests of ordinary shareholders, including Invesco itself, saying that it “simply defies logic.”

A filing with the Bombay Stock Exchange on Tuesday showed that Goenka shared a note with Zeel’s board that detailed a proposed transaction under which the company’s current shareholders would have held 40 per cent while an unnamed (Strategic Group) Indian group, would have controlled 60 per cent after infusing Rs 14,000 crore cash in the merged entity.

Goenka disclosed that as part of the Reliance deal, he would have continued as the managing director and chief executive officer of the merged entity and the promoter group of Zeel would be given 3.99 per cent shareholding of the merged entity. Goenka was also offered employee stock options (ESOPs) representing up to four per cent of the shareholding of the merged entity meaning that the promoter group would hold up to seven to eight per cent stake in the merged entity.