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Was RIL Considering Hostile Takeover Of Zee Entertainment?

This has put RIL in a difficult position with, corporate circles abuzz with whispers that Asia's richest businessman, Ambani was contemplating a hostile takeover of Zee entertainment group.

Was RIL Considering Hostile Takeover Of Zee Entertainment?
Was RIL Considering Hostile Takeover Of Zee Entertainment?
outlookindia.com
2021-10-14T16:10:44+05:30

Adding a twist to the ongoing corporate battle between Zee Entertainment Enterprises (ZEEL) and Invesco, it has now emerged that the latter had in February supported the possible merger talks between media firms owned by Reliance Industries Ltd (RIL)and the Zee Group.

This has put RIL in a difficult position with, corporate circles abuzz with whispers that Asia's richest businessman, Ambani was contemplating a hostile takeover of Zee entertainment group.

On Wednesday, Reliance Industries, which owns Network18 Media and its subsidiary TV18 Broadcast, stepped into the long-drawn corporate war. It said in a statement that it was in talks for acquiring ZEEL, however, it did not move ahead after discussion between Invesco and the Zee promoters broke down, reported Business Standard.

RIL added that it respects all founders and has never resorted to any hostile transactions in the past and hence it did not proceed further.

According to the RIL statement, Invesco, which owns 17.88% in Zee Entertainment, had assisted Reliance in arranging discussions directly between its representatives and ZEEL managing director and chief executive officer Punit Goenka.

“We had made a broad proposal for merger of our media properties with Zee at fair valuations of Zee and all our properties. The valuations of Zee and our properties were arrived at based on the same parameters. The proposal sought to harness the strengths of all the merging entities and would have helped create substantial value for all, including the shareholders of Zee,” it pointed out.

According to Reliance, Invesco contested that the founders could always raise their stakes in the company using market purchases. Reliance further informed that it endeavours to continue with the existing management of the investee companies and reward them for quality performance. Therefore, the proposal included the continuation of Goenka as Managing Director and the issue of employee stock ownership plan (ESOPs) to the management. 

Earlier, ZEEL said it had come with a proposal in February this year for a merger of the company with certain entities owned by a large Indian group (Strategic Group) with an inflated valuation "by at least Rs 10,000 crore".

Ambani’s Media business

Network 18 is 75% owned by Independent Media Trust whose sole beneficiary is RIL. As of now, Network 18 owns 51% in TV 18 which in turn owns 51% in Viacom 18 (a JV with Viacom) .

TV18's market cap at the time of publishing stood at Rs 7,508 Crore. For Network18, it stood at Rs 7,490 crore.

The entertainment channels that are housed under the Viacom 18 JV include Colors, MTV, and Nickelodeon among others and video streaming service VOOT.

Sony was engaged in negotiating with Reliance Group to merge their entertainment businesses to create a larger general entertainment company in 2020.

A year later, Sony has managed to strike a similar deal with Zee Entertainment, leaving RIL out of the picture.

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