BackProposal from Invesco undervalued ZEEL: MD
Punit Goenka said he would do anything to preserve firm’s intrinsic value
PremiumNEW DELHI : The valuation of Zee Entertainment Enterprises Ltd (ZEEL) given in US fund manager Invesco’s proposal was not in the interest of the company’s shareholders, ZEEL managing director and chief executive Punit Goenka said on Thursday. He also questioned why Inve-sco did not make its plans public earlier.
Earlier this week, the media group had written to the stock exchanges that the US investor’s activism, including demanding a special shareholder meeting, followed Goenka’s rejection of a deal that Invesco had proposed earlier this year.
“During my briefing to the board, I emphasized on the points pertaining to the proposal from Invesco. My attention was on the imbalance observed in the valuation and how it was not in the best interest of our shareholders. The only reason I did not agree to the proposal was because the shareholder value was getting compromised," Goenka said.
Goenka said he would withstand any amount of pressure to preserve Zee’s intrinsic value and ensure that nothing impacts the returns being delivered to all shareholders.
“I acknowledge the stance that has been taken by Invesco, but communications pertaining to such proposals are always well-documented and they speak to the contrary," he said.
Goenka asked why Invesco did not make its plans public earlier. “Does good corporate governance only apply to corporates and not their institutional investors?" he asked. He said he reposes complete faith in the Indian judicial and regulatory system and is certain that these questions will be answered for all.
Goenka hoped this will be his first and last communication on this matter. He also acknowledged that Invesco had been a strong support to the company, for the most part. “It pains me to see this relationship going sour and the unfortunate circumstances that we are facing," he said.
“We should not let anyone impact the future of Zee or diminish the shareholder value it has been consistently generating over the years," Goenka said.
In a six-page letter to the stock exchanges earlier this week, ZEEL had disclosed a merger proposal with a “strategic group" earlier in the year.
Goenka claimed that after discussing for over a month with Invesco’s executives and with representatives of the unnamed Indian media group, he decided to reject the transaction.
The letter did not name the group, but Invesco issued a separate statement saying the potential transaction proposed by “Reliance (the “strategic group" referenced but not disclosed in the 12 October communication by Zee) was negotiated by and between Reliance and Mr Goenka and others associated with Zee’s promoter family… the role of Invesco, as Zee’s single largest shareholder, was to help facilitate that potential transaction and nothing more".
In another statement, Reliance Industries Ltd (RIL) said differences between Goenka and Invesco over how the Goenka family would raise its stake in Zee had led to the collapse of merger talks with RIL’s media properties.
Mukesh Ambani-led RIL had proposed to merge its media properties with Zee in February after Invesco helped arrange discussions between Goenka and RIL’s representatives, adding that it regretted being dragged into a dispute between Zee and the US investment firm.
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