India’s Zee Entertainment Enterprises finally agreed on Thursday to investment firm Invesco’s long-pending demand for an extraordinary general meeting (EGM) of shareholders, after the Bombay high court agreed to allow the group a week to contest the resolution passed.
Zee will set a date for the meeting on Friday.
The Atlanta-based Invesco fund, which holds 18% of Zee shares has been calling since Sept. 11 for an EGM that would remove CEO Punit Goenka, who, along with his family holds a 4% share in the company, and add six directors of its choosing to the board.
However, on Sept. 21, Zee sprang a surprise when it revealed a merger with Sony Pictures Networks India. The merged company is to be headed by Goenka and, following a cash injection of $1.57 billion from Sony India’s backers, the Sony shareholders would control a 53% majority stake. The proposed deal also allowed Goenka’s family to raise its stake in the company from 4% to 20%.
Invesco took its demand for an EGM to India’s National Company Law Appellate Tribunal. The process has dragged on since then.
During the process, the name of billionaire Mukesh Ambani’s Reliance Industries cropped up as being involved in a deal for Zee earlier this year. Reliance released a statement that confirmed its previous merger discussions Zee, facilitated by Invesco.
That scenario would have seen Goenka continuing as the head of the company and being offered shares. However, when it became clear that a rift between Invesco and Goenka had emerged, Reliance decided not to pursue deal.
Meanwhile, Goenka released a statement on the matter that said: “My demeanor is not to indulge in an ill-natured fight. Such battles are best handled by legal experts. All I am contending for, is to preserve the future of this company, and not my position. This fight is to ensure the company continues to gain immense growth opportunities and become a stronger and more formidable player in the media & entertainment sector. We should not let anyone impact the future of Zee or diminish the shareholder value it has been consistently generating over the years.”
In turn, an Invesco statement said: “We are disappointed that the leadership of Zee has resorted to a reckless public relations campaign in response to the overwhelming demand from shareholders for leadership changes at Zee.”
The battle lines are drawn and, once a date for the EGM is fixed, both sides will muster as many shareholders on side and actually vote. Typically, shareholder meetings in India see low turnout and participation of 30% is rare.