US investment firm Invesco on Monday publicly lashed out at television giant Zee and objected to some terms of its proposed merger with Japan's Sony Group, asking shareholders of the media company to support a bid to revamp its management.
Invesco funds own nearly 18 per cent of Zee, and its first such public tirade ratchets up pressure on one of India's biggest television groups just days after its founder accused Invesco of plotting a hostile takeover.
The dispute centres around Invesco's call to revamp Zee's board and remove its CEO, Punit Goenka, in light of corporate governance lapses and financial irregularities, which were also this year flagged by India's market regulator. Zee has rejected Invesco's request and says it has tightened its processes.
In an open letter and press statement, Invesco said the terms of a planned Zee-Sony merger announced last month give the founding family of Zee an option to ramp up their stake to 20 per cent, from 4 per cent, via methods that remain "wholly opaque".
Zee did not respond to a request for comment. Sony did not immediately respond to requests for comment outside of its regular business hours.
"This lack of clarity around key aspects of the Zee-Sony announcement should concern all shareholders. We currently consider it to be no more than camouflage on the part of Zee to divert and distract from the primary issues," Invesco said.
We will "firmly oppose any strategic deal structure that unfairly rewards select shareholders, such as the promoter family, at the expense of ordinary shareholders," it added.
Other than the hoped-for ouster of current Zee CEO Goenka, Invesco has suggested that six new independent board members should be appointed at Zee. It has asked an Indian tribunal to force Zee to call for a meeting to consider its demands, and Zee has two weeks to respond.
Invesco also called for support from Zee shareholders in its letter on Monday, saying there was an urgent need for strengthened independence on Zee's board.
In his TV appearance last week, Zee's founder Subhash Chandra, who is CEO Mr Goenka's father, asked Invesco to "behave like a shareholder not like the owner," adding "You want a fight, then I will fight back."
Invesco said in its statement that Zee had resorted to "a reckless and desperate public relations effort".
In recent weeks, Zee, which is a household name in India's television and film landscape, has found support from Bollywood stars, who have said on social media they hope the crisis ends soon for the group.