RIL is dragged into ZEE Invesco dispute, and says he has never used hostile transactions

Reliance Industries was drawn into the ZEEL/Invesco saga by its February proposal to merge media properties with Zee.

This statement was made a day after the ZEEL Board considered Punit Goenka’s note as Managing Director (MD), and Chief Executive Officer(CEO) that discussed a merger proposal being pushed earlier in February by Invesco that would have robbed shareholders at least Rs 10,000 crore.

Now it appears that the Invesco-facilitated merger proposal was actually that of RIL. RIL was seeking to merge its media properties and Zee.

“We are sorry that our name was included in the Invesco and Zee dispute. RIL stated that media reports are inaccurate and gave details of the events that led to discussions between its representatives, Punit Goenka, and other parties about a possible merger.

Invesco assisted Reliance to arrange discussions between our representatives, Punit Goenka (member of the founder family, and Managing Director at Zee) in February/March 2021. We had proposed a merger of all of our media properties and Zee, at fair valuations of Zee as well as all of our properties. Based on the same parameters, Zee’s and our properties’ valuations were reached. According to the RIL statement, the proposal sought to harness all the strengths of the merging entities and would have helped create substantial wealth for all shareholders, which included Zee shareholders.”

Goenka had stated in his board note that the Company’s management team had told the board that they believed that the Strategic Group entities could have had a valuation that was at least Rs 10,000 crore higher than it actually is. If the deal had been approved, shareholders would have suffered losses of Rs 10,000 crore.

Reliance strives to support the current management of investee companies, and rewards them for their efforts. Accordingly, the proposal contained Mr Goenka’s continuation as Managing Director and the issue of ESOPs for management, including Mr Goenka,” said the RIL statement.

“But, there were differences between Invesco and Mr Goenka over a requirement by the founding family to increase their stake through subscribing for preferential warrants. According to the statement, investors believed that founders could increase their stake by market purchases. However, the company decided not to proceed with its proposal because it respected all founders and has never used hostile transactions.