The Telegraph
Since 1st March, 1999
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Hutch in Sarin hands
- Winner Vodafone woos Essar

Mumbai, Feb. 11: Vodafone — the world’s biggest mobile phone company by revenues — has won the battle for control of Hutchison Essar, India’s fourth-largest cellular operator.

On Sunday, the three Indian contenders in the fray — Anil Ambani’s Reliance Communications, the Ruias of Essar group and the Hinduja group — appeared to have thrown in the towel after it emerged that the London-based telecom operator had stumped up a bid that valued Hutchison Essar around $18.8 billion (or Rs 84,600 crore).

This means Vodafone would pay around $11.1 billion for the 67 per cent stake on sale.

“We are delighted to be deepening our involvement in the Indian mobile market. We have concluded this transaction within our stated financial investment criteria,” Vodafone chief executive officer Arun Sarin said.

It is learnt that the offers made by two Indian groups were in the range of $17 billion.

This is the third big-bang deal this year involving Indian companies after the Tatas’ bid for Corus and the Birlas’ acquisition of Novelis (see box). However, in the Hutch race, a foreign company — led by India-born Sarin — has outbid Indian groups.

Vodafone has been keen to make a decisive push into India — the world’s fastest growing mobile telephony market — since opportunities in the developed markets are crimped by competition. Vodafone’s entry promises to add more zing to the Indian cellular market.

Sources who have been monitoring the Hutch deal said the Hong Kong-based company could issue a formal statement tomorrow after notifying the stock exchange there.

Hutchison Telecom International Ltd, 49 per cent owned by Hong Kong tycoon Li Kashing, had put up for sale its 67 per cent stake in Hutchison Essar.

The Hutchison Telecom board met today to discuss the bids. Although Hutchison itself maintained a studied silence, the other contenders came out with statements that indicated they were not likely to try and trump Vodafone’s bid.

Vodafone has invited the Ruias of the Essar group to partner it in the company. The Ruias have a 33 per cent stake in Hutchison Essar and a disputed right of first refusal on any share sale by Hutchison Telecom.

“We have been offered by Vodafone to be their partner. We are at the moment evaluating all our options in the best interest of the group,” the Essar group said in a statement.

The Ruias’ statement added: “Vodafone’s offer values Hutchison Essar at around $19 billion (Rs 85,000 crore). This is a good price which reflects the premier position of Hutchison Essar as India’s leading operator. Essar owns 33 per cent of the company and we are delighted that Hutchison and Essar have together created this value.”

“Telecommunication is a core business for the Essar group and we continue to create value in this sector both within India and globally,” said Ravi Ruia, Essar vice-chairman.

Sarin, Vodafone’s chief executive, had in the past also articulated his desire to partner the Ruias. Such a partnership will preclude the possibility of a messy legal battle.

Although officials of Reliance Communications refrained from making any comment, sources indicated that the company was unlikely to top Vodafone’s bid.

Had R-Com been successful in its bid for Hutch, it could have raced to the numero uno position in India’s mobile phone space.

Vodafone will now have to sell its 10 per cent stake in Sunil Mittal’s Airtel, which owns India’s largest cellular service.

another metal milestone

Hindalco, headed by Kumar Mangalam Birla (in picture), today acquired US-based Novelis Inc, the world’s top producer of aluminium rolled products. The all-cash Birla deal of $6 billion is the second- largest cross-border acquisition pulled off by an Indian company after Tata Steel’s Corus coup.

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