The proposed merger between Sony India and Zee Entertainment has now seen a strongly-worded letter to shareholders from Invesco, a Zee major investor. The letter alleges that the terms of the draft agreement appeared to favour Zee’s founding family. This directly targeted at founder Subhash Chandra and his son, Zee’s CEO Punit Goenka.
Invesco is demanding an Extraordinary General Meeting be called and a new board of directors to be appointed at Zee as well as the removal of Punit Goenka. Invesco owns an 18 per cent share of Zee and is the largest shareholder.
Zee is “a highly-undervalued asset, mired in innuendo and financial volatility” says the Invesco letter. “We will firmly oppose any strategic deal structure that unfairly rewards select shareholders, such as the promoter family, at the expense of other shareholders,” stated Justin Leverenz, chief investment officer of Invesco Developing Markets Equities. “The conduct of an EGM is a shareholder right which we expect to exercise.”
Financial challenges at Zee has resulted in Subhash Chandra’s personal shareholding falling from 35 per cent to 4 per cent in 2019.