Zee open to rival offers to Sony bid as largest investors balk

Zee Entertainment Enterprises Ltd. said a potential merger with the Indian unit of Sony Group Corp. is the best deal on the table but India’s biggest private-sector TV network is open to offer from other bidders even as it faces resistance from key shareholders.

“This is the best deal for shareholders at this point in time as we are interested in maximization of values for all our stakeholders including shareholders, the company and consuming public,” company’s chairman R. Gopalan said in a Bloomberg Television interview Wednesday adding the company is open to “consider if there is another deal on the table.”

Gopalan’s comments show the battle between the company and its largest investors is set to worsen. Zee has already filed a law suit asking the Bombay High Court to declare illegal and invalid a notice by key investors Invesco Developing Markets Fund and OFI Global China Fund LLC calling for a meeting of shareholders. Invesco and OFI sought court’s intervention after the entertainment company refused to hold the meeting.

The funds want the ouster of Zee board members including Chief Executive Officer Punit Goenka, who’s spearheading a 90-day exclusive merger talks with Sony. About 53% of the merged entity would be owned by Sony and the rest by Zee’s holders, according to the non-binding agreement signed last month.

The new shareholder will inject capital so that it will have about $1.58 billion of funds at closing, and Sony would nominate a majority of the board.

“We, as a board, have taken decisions based on applicable laws of land and what we think is good for shareholders,” Gopalan said. “As of now, the due diligence process has already commenced and is progressing speedily. Post that, we will take it to shareholders for approval.”

The merged entity will look at bidding for broadcast rights of the Indian Premier League cricket tournament that is coming up for auction in December.  “Sony is very good in sports. It is a natural fit for us to bid for that,” Gopalan said. Bloomberg