US investment firm Invesco, which was until recently locked in a boardroom battle with Zee Entertainment Enterprises Ltd, has decided to reduce its stake in the latter via a block deal on April 7. Invesco, which is currently Zee’s biggest shareholder and holds a total of 17.88 per cent stake along with OFI Global China Fund LLC, will offload up to 7.8 per cent of the equity. It will by selling 7.4 crore shares, which is worth around Rs 2,200 crore of the stock.
The price will range between Rs 270 and Rs 290 per share, and Kotak Mahindra Bank will be the banker for the block deal, reported CNBC-TV18.
“Three funds managed by Invesco’s Developing Markets investment team, including Invesco Developing Markets Fund, are launching a bookbuild transaction today to sell up to 7.8 per cent of the share capital of Zee Entertainment. The purpose of this transaction is to align these funds’ exposures to Zee with other funds managed by the investment team and to achieve an aggregate ownership position in the company that is more in line with the investment team’s portfolio construction approach,” Invesco said in a statement.
“Upon completion of the bookbuild, funds managed by Invesco’s Developing Markets investment team, including Invesco Developing Markets Fund, will continue to own in aggregate at least 11 per cent of Zee, underscoring the investment team’s belief that the Sony deal in its current form has great potential for Zee shareholders,” the statement added.
Zee shares closed at Rs 290.95 per share on Wednesday.
The development comes less than two weeks after Invesco withdrew its demand for an extra-ordinary general meeting (EGM), which it was pursuing since September 2021, to push for the ouster of Zee’s CEO Puneet Goenka and also rejig of the board.
On 23 March, Invesco said it has decided not to pursue the EGM to add six independent directors and instead reiterated its support for the proposed merger of Zee with Sony.
“We continue to believe this deal in its current form has great potential for Zee shareholders. We also recognise that, following the merger, the board of the newly combined company will be substantially reconstituted, which will achieve our objective of strengthening board oversight of the company,” Invesco had said.
Last year in December, Sony Pictures Networks India Pvt Ltd (SPNI) and Zee Entertainment Enterprises Ltd (ZEEL) signed definitive agreements for merger of ZEEL into SPNI following the conclusion of an exclusive negotiation period during which both parties conducted mutual due diligence.
When the merger deal was announced in September 2021, the two networks had stated that Sony would invest USD 1.575 billion and hold 52.93 per cent stake in the merged entity and Zee the remaining 47.07 per cent.
Under the terms of the definitive agreements, SPNI will have a cash balance of USD 1.5 billion at closing, including through infusion by the current shareholders of SPNI and the promoter founders of ZEEL.
ZEEL’s chief executive Punit Goenka will lead the combined company as its Managing Director & CEO.
The merged entity will become India’s second-largest entertainment network by revenue with 75 TV channels along with two video streaming services — ZEE5 and Sony LIV). It will also house two film studios — Zee Studios and Sony Pictures Films India and a digital content studio (Studio NXT).
When it is completed Sony Pictures Entertainment Inc will indirectly hold a majority 50.86 per cent of the combined company and the promoters (founders) of ZEEL will hold 3.99 per cent, while the other ZEEL shareholders will hold a 45.15 per cent stake.
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