Zee-Sony merger: all eyes are now on Zee Entertainment shareholders
With Zee Entertainment Enterprises Ltd announcing the merger of Zee and Sony Pictures Networks India, the role of the first shareholders has become very important. All eyes will now be on when Zee will convene an Extraordinary General Meeting (EGM) to seek approval of the merger.
The promoter’s holding, led by Subhash Chandra and his family, is less than 4%, and how they managed to pull off a hit with Sony is quite a story. All of this came just days after Atlanta-based global fund Invesco, which owns more than 17% of the company’s shares, called for an EGM, seeking to oust Zee MD Punit Goenka from the board. of the society.
In what has been a fascinating corporate battle filled with intrigue at every step, it would be interesting to see how things play out at EGM. Zee will also request an EGM to get a green signal from its shareholders for the merger proposal. The question is how delicate the situation is at the moment.
Also read: Zee-Sony Fusion: How Invesco’s Decision To oust Punit Goenka Got Subhash Chandra Into Action
According to Shriram Subramanian, founder of InGovern, a proxy advisory firm, shareholder approval is what will get it. “It doesn’t matter how much Zee’s promoters hold. Even a person with a zero percent stake can attempt a deal as long as the shareholders give the green light,” he says. In the midst of all of this, there is a possibility that a hostile offer will take place and as in any other case, return to the shareholders.
There is no word on what will happen now or elsewhere, who will take the first step. Subramanian points out a few potential scenarios – Invesco has already requested an EGM and Zee could decide to have it on the same day, leading to the most interesting situation. It is also possible that Invesco will withdraw its EGM call – in any case, it must be made within 45 days of the request and no date has yet been announced.
“The whole development on Zee-Sony is actually now positive for Invesco. Sony is now publicly traded in India and the emergence of a massive new company,” says Subramanian. It is not clear whether Invesco will continue to push for the EGM and the appointment of six new independent directors.
Also Read: AfDB Cuts India’s GDP Growth Forecast To 10% For This Fiscal Year
Chandra, with the deal, has ruled out potential bidders and is confident the board is firmly on her side, a former Zee official said. “International investors were calmed down and Chandra retained control.” He expects Zee shares to do well thanks to Sony’s infusion of funds ($ 1.57 billion or 12,000 crore rupees) and “that will keep the minority and other opposing shareholders silent and Invesco’s argument will also be neutralized “.
Meanwhile, NV Capital co-founder Vivek Menon believes “Zee Entertainment’s corporate governance overhang should also fade with this merger and boost investor confidence. In addition, the entity Combined will be in a superior position to compete more effectively with Disney on both the distribution and the advertising side. “
The announcement of the merger surprised everyone. Chandra’s Zee is seated well now, unlike a few days ago when he was looking at the cannon. As one investment banker puts it, “Zee was looking for a white knight (and) is now about to be (a) king.”
Read also: Zee-Sony OTT platform: an ideal match, according to experts