Breaking News
Black Friday SALE: Up to 54% off InvestingPro! Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Explainer-How Invesco and Indian TV giant Zee got caught in legal row

Stock MarketsOct 13, 2021 08:50AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: Punit Goenka, CEO and managing director of Zee Entertainment Enterprises, attends a news conference before the Zee Cine Awards in Macau January 21, 2012. REUTERS/Bobby Yip/File Photo

By Abhirup Roy and Aditya Kalra

NEW DELHI (Reuters) -Indian TV network Zee Entertainment is locked in a legal battle with its top investor Invesco after the U.S. firm, citing corporate governance concerns, called for the CEO's removal and a revamp of the company's board.

Zee has said it has tightened its governance, but the row is unabated just as one of India's biggest news and entertainment TV groups plans a merger with the local unit of Japan's Sony (NYSE:SONY) Group Corp.

Here is what the dispute is all about:

WHAT DOES INVESCO WANT?

Invesco's legal filings reviewed by Reuters - which are not public - show it wants changes at Zee in light of corporate governance and financial irregularities that have plagued the company, and have even been flagged by India's market regulator.

Invesco's Developing Markets Fund and its OFI Global China Fund LLC together own a near 18% stake in Zee. They have suggested six new independent board members to be appointed and the removal of Zee CEO Punit Goenka.

Invesco asked Zee on Sept. 11 to call an "extraordinary general meeting" of shareholders to consider its demands.

HOW ZEE VIEWS INVESCO'S DEMANDS

Zee on Oct. 1 rejected Invesco's request to revamp the board. Invesco then took the battle to India's companies tribunal, where it is trying to force Zee to call the meeting, saying Zee's behaviour is "oppressive". A tribunal has ordered Zee to respond before Oct. 22.

The Indian TV giant says that it has implemented corrective plans to address concerns raised by the market regulator and that it follows the "highest standards of governance".

It remains unclear which way the shareholders will vote if a meeting is called, but Zee's founder Subhash Chandra, father of CEO Goenka, has accused Invesco of plotting a hostile takeover.

"They want to take over the company against Indian laws," Chandra has said. Invesco has said good governance can help improve Zee's business.

IS THE ZEE-SONY DEAL AT RISK?

While Invesco was pushing for a shareholder meeting, Zee announced its talks with Sony. The terms say Goenka will be CEO of the merged entity, which will be majority owned by Sony.

Invesco has in Indian tribunal hearings said it is not against the Zee-Sony plan, but its filing does criticize how the two entered into talks.

The Sony deal would allow Chandra's family to raise their shareholding to up to 20%, from 4% now, Invesco said, adding that it was "plainly an attempt to distract the general public" and stall the convening of a shareholder meet.

BOLLYWOOD SUPPORT

A teary-eyed Chandra made a prime-time TV appearance on Zee's Hindi news channel, highlighting Zee's journey in India.

"I urge Invesco to behave like a shareholder not like the owner ... You want a fight, then I will fight back," he said.

Zee, which has for years offered dozens of entertainment channels and shows in many local languages in India, is a household name. It is now finding support from Bollywood.

"Zee which was first Indian channel promoted by Indian nationalist ... (is) now hounded by American and Chinese investors. Pray Zee Entertainment remains in original Indian entrepreneur's passionate hands," film producer Boney Kapoor said on Twitter (NYSE:TWTR).

BEFORE SONY: RELIANCE TALKS

Invesco, according to Zee, tried in February to forge a deal with parts of an Indian group in a move that would have allowed Goenka to head the new company and raised his family's stake in the merged firm. Zee did not name the group.

That deal did not go through, however, as Zee did not believe it was in shareholders' interest.

In response, Invesco accepted that it did facilitate talks, which it said were between Zee and Reliance, naming for the first time the conglomerate controlled by billionaire Mukesh Ambani.

Invesco added that it would not seek a deal that would dilute long-term shareholder interest.

Reliance also confirmed it approached Zee for a merger with help from Invesco but said the talks fell apart as the investment firm did not agree with a demand from Goenka's family for an option to raise their stake later. It added that it had never resorted to any hostile transactions.

Explainer-How Invesco and Indian TV giant Zee got caught in legal row
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email