The merger of Zee Entertainment Enterprises Limited and Sony Pictures Networks India Pvt (SPNI) rests on the public shareholders of Zee, with largest shareholder Invesco vehemently opposed to the merger.

Zee needs to get at least 75 per cent votes in terms of its shareholding for the merger, which will be a challenge with Invesco holding 18 per cent shares. Public shareholders hold around 96 per cent of Zee, while the promoters hold around 3.99 per cent, according to data with the stock exchanges .

Invesco had earlier sought the removal of Zee’s managing director and CEO Punit Goenka, and the appointment of six independent directors.

In a letter written to the shareholders of Zee on October 11, the fund said the non-compete clause between Sony and the company’s founders — which “gifts” the latter two per cent stake — is dilutive to all other shareholders.

It had also said that the founders of Zee have an option to raise their stake to 20 per cent and that the proviso was silent on how this

would be done and whether it would change the majority control of Sony in the merged company.

While these observations came after the non-binding term sheet that was signed between Zee and Sony in September, the definitive agreements between the duo do not contain any major change.

Accordingly Sony Pictures Entertainment Inc (SPE) the parent of SPNI will indirectly hold a majority 50.86 per cent of the merged entity while the founders of Zee will hold 3.99 per cent and public shareholders, 45.15 per cent.

Further, SPE Mauritius, a Sony group company will pay Rs 1,101 crore to Essel Mauritius, a promoter firm from the Subhash Chandra group. This fees will be infused by Essel into SPNI, thereby giving Zee founders an additional 2.11 per cent stake in the merged company.

Observers said that with the non-compete clause staying and Zee founders also having the option to raise their stake up to 20 per cent, it remains to be seen if Invesco opposes this key feature in the merger.

In October, the Bombay High Court had temporarily restrained Invesco from calling an extraordinary general meeting (EGM) for the removal of Goenka and the appointment of its six nominees on the company’s board. The fund later filed an appeal against this order.

“With the merger agreement signed, key things to watch out for now will be Invesco’s support for the merger, timely regulatory approvals, smooth integration, strategic roadmap for OTT investments, and recovery in Zee’s viewership share in select core markets’’, analysts at Emkay said in a note.

On Wednesday, Goenka had said in an analyst call that the merger process could take 8-10 months to be completed, even as he also indicated that it will require the support of 75 per cent of Zee’s shareholders.