Shares of Zee Entertainment Enterprises zoomed as much as 17% in opening trade on Thursday after Invesco Developing Markets Fund withdrew its requisition notice that sought the removal of MD and CEO Punit Goenka from the board of Zee.
Invesco, which is Zee's largest shareholder with an ownership interest of nearly 18%, had called for an EGM to oust Goenka in September last year.
"Since we announced our intention to requisition an EGM and add six independent directors to Zee's Board of Directors, Zee has entered into a merger agreement with Sony. We continue to believe this deal in its current form has great potential for Zee shareholders. We also recognize that, following the merger's consummation, the board of the newly combined company will be substantially reconstituted, which will achieve our objective of strengthening board oversight of the company. Given these developments, and our desire to facilitate the transaction, we have decided not to pursue the EGM as per our requisition dated 11 September 2021," the US-based investor said.
Invesco, however, said it will continue to monitor the proposed merger's progress. "If the merger is not completed as currently proposed, Invesco retains the right to requisition a fresh EGM."
Invesco also hailed the Bombay High Court's ruling, calling it as an important reaffirmation of shareholder rights in India and the mechanisms under Indian law to hold Boards accountable to their shareholders. The ruling is a boon for corporate governance in India and a win for shareholder democracy, it said.
Last year, Zee Entertainment and Sony Pictures Network (SPN) announced that they have signed definitive agreements to merge and combine their linear networks, digital assets, production operations and programme libraries under the two media giants, creating the second largest entertainment network in the country.
The combined entity will include 75 TV channels, two film studios – Zee Studios and Sony Pictures Films India, as well as two video streaming services – ZEE5 and Sony LIV, and digital content studio Studio NXT, which is currently under Sony Pictures Network.
After the deal is closed, Sony Pictures will hold a majority 50.86% of the combined entity. Meanwhile, the founders of the homegrown entertainment company will hold 3.99%, and the other ZEE shareholders will hold a 45.15% stake.