Investment firm Invesco has lashed out against the proposed merger between Indian media giant Zee and Sony Group.
Announced last month, Sony Pictures Networks India (SPNI) announced a deal to take control of Zee Entertainment. The proposed merger would combine both companies’ linear networks, digital assets, production operations and programme libraries, with Sony Pictures Entertainment holding a majority stake in the combined company.
Invesco Developing Market Fund and OFI Global China Fund LLC together own 17.88% of Zee’s shares and have called on shareholders to implement a revamped executive board. This would include the removal of Puneet Goenka as CEO. Goenka’s father Subhash Chandra founded the company and last week accused Invesco of plotting a hostile takeover.
Invesco’s ire is motivated by corporate governance lapses and financial irregularities that were flagged by India’s market regulator.
The company has now published an open letter to Zee investors, highlighting its issues with the company.
In the letter, Invesco chief investment officer, developing markets equities Justin Leverenz wrote: “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. These actions and rhetoric are aimed at avoiding true accountability for the governance lapses and shareholder value destruction that the current leadership and Board have presided over. We are calling on Zee shareholders to join us in asking why the founding family, which holds under 4% of the company’s shares, should benefit at the expense of the investors who hold the remaining 96%.”
The letter goes on to accuse Zee’s incumbent board and management of demonstrably destroying shareholder value, while stating that its recent actions “further confirm a deep apathy to shareholder rights.”
In regards to the merger with Sony, the letter adds that the deal gives the founding family of Zee an option to increase their stake from 4% to 20% via “wholly opaque” means.
Invesco also provides its evaluation of the merger as “no more than camouflage on the part of Zee to divert and distract from the primary issues before the company.”
The letter reiterates Invesco’s demands for a restructured board, including the ousting of CEO Goenka, along with the appointment of six new independent board members.
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