Hours after a proposed merger between Reliance Industries Ltd.'s media entities with Zee Entertainment Enterprises Ltd. was revealed, the Mukesh Ambani-controlled group said the transaction was derailed by differences between the broadcaster's Managing Director Punit Goenka and its single-largest shareholder Invesco Developing Markets Fund.
Reliance said Invesco had assisted it in arranging discussions with Goenka between February and March this year. “We had made a broad proposal for merger of our media properties with Zee at fair valuations of Zee and all our properties," Reliance Industries said in a statement. "The valuations of Zee and our properties were arrived at based on the same parameters.”
Proposal included continuation of Goenka as managing director and issue of employee stock options to management.
Goenka and Invesco, Reliance said, differed on the requirement of Zee group's founding family increasing stake by subscribing to preferential warrants.
"At Reliance, we respect all founders and have never resorted to any hostile transactions," the company said. "So, we didn't proceed further."
On Wednesday morning, Invesco Developing Markets Fund issued a statement saying it was facilitating the transaction between Reliance entities and Zee. That came in response to Goenka's letter to the Zee board, disclosed on Oct. 12, saying that Invesco had approached him with a deal to merge Zee with a large Indian group, without naming the entity.
Invesco, along with affiliate OFI Global China Fund, owns 17.88% of Zee Entertainment. It's currently locked in a legal dispute to oust Goenka and appoint six new independent directors.
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