New Delhi: Merger talks between MTN Group Ltd, Africa’s biggest phone firm, and India’s Reliance Communications Ltd (RCom) have entered “the final stage of due diligence” and negotiations between the top managers and representatives of the two companies in London will likely end in a deal this week, a person with knowledge of the discussions said on Monday.
This person said the ratio at which to swap shares of the two firms in the merger was being finalized. Based on the current market capitalizations of the two firms—shares of MTN are valued at $38 billion (Rs1.63 trillion) and RCom at $28 billion—the swap would work out to 17 shares of MTN for 23 of RCom or nearly a 74:100 ratio.
But, The Economic Times newspaper reported on Monday, quoting unidentified sources, that the MTN management was asking for a ratio of 51 MTN shares for 100 RCom shares while the Mumbai-headquartered firm was pushing for a 66:100 ratio. This lower range being discussed could reflect the higher growth potential of the RCom business.
The Indian mobile phone services market, with nearly 270 million subscribers, is second only to China and is the world’s fastest growing with monthly customer additions topping 8 million.
The MTN-RCom deal will be structured primarily as an equity swap “which could be little more than 85%, and the rest will be on cash from private equity investors,” the person said. Buyout firms such as Carlyle Group, Blackstone Group LP and Apax Partners LLC have agreed to fund some $5 billion in the deal. A successful merger between the two will create a phone services giant with over 115 million customers stretching from South Africa to Iran to India.
Talks are currently centred around RCom becoming a unit of MTN with Anil Ambani becoming the single largest shareholder in the merged entity.
Negotiations between the two began after MTN’s talks with Bharti Airtel Ltd failed on 24 May.
Maa Bozell to be known as Maa Communications
Bangalore: Bangalore-based advertising agency Maa Bozell is undergoing a brand makeover— with a new logo and name—Maa Communications. The company has bought back 29% of its stake from the IPG Group. The agency, part of the Rs 250 crore-Maa Group, had entered into a joint venture with Bozell back in 1991. Maa Communications has now acquired new business such as Biocon Ltd in Bangalore, Tata Coffee Ltd for its Mr Bean outlets, Tata Coffee Plantation Trails and Paramount Airways in Chennai. As part of the revamp, the company is also planning to kick “Outthinking’, a new practice supported by a brand new in-house toolkit to arrive at new propositions. Madhurima Nandy
Jet Airways defers start of flights to Hong Kong
Mumbai: India’s top private carrier Jet Airways (India) Ltd has delayed the start of its New Delhi-Hong Kong flights by a few months, a senior official said, signalling deepening gloom in an industry buffeted by high oil prices.
There are no plans “at the moment” to rationalize other routes, executive director Saroj Datta said on Monday.
“We are deferring New Delhi-Hong Kong flights to the winter, taking into account the requirements of the market, and redeploying the capacity,” he said.
The flights had been scheduled to start in June. State-run rival Air India is examining its schedule but has not made a decision yet, a spokesman said.
Indian jet fuel prices have risen nearly 90% since last June, which may cause Indian airlines to double their losses in 2008-09 from Rs4,000 crore ($932 million) a year ago, the civil aviation secretary said last week. Reuters
Banks get more time to record market exposure
Mumbai: The Reserve Bank of India or RBI has extended the compliance period for banks till 13 September to record their lending to mutual funds as ‘capital market exposure’ by three months. The earlier deadline expires in mid-June.
Under Securities and Exchange Board of India regulation, a mutual fund is not allowed to borrow except to meet temporary needs. Such funds are also not allowed to borrow more than 20% of the net asset of the scheme and for duration not exceeding six months.
RBI had found that certain banks had extended large loans to various mutual funds but these were not included by the banks while computing their capital market exposure. The aggregate exposure of a bank should not exceed 40% of its consolidated net worth— equity and reserves—as on 31 March of the previous year. Anup Roy
Bhandari quits HDFC Bank after CBoP merger
Mumbai: After assisting in the merger of Centurion Bank of Punjab Ltd (CBoP) with HDFC Bank Ltd, CBoP head Shailendra Bhandari has quit HDFC Bank, said a bank release. Bhandari, who was head of CBoP for the last four years and was the executive director and treasurer of HDFC Bank before that, cited personal reasons for leaving the merged entity. During the time of the merger, the banks had said Bhandari would be the executive director on HDFC Bank’s board.
He was a founding members of the team that floated HDFC Bank. Anup Roy
‘Cut time on disclosing price-sensitive details’
Mumbai: Capital market regulator Securities and Exchange Board of India, or Sebi, on Monday released a consultative paper, proposing to reduce the time between acquiring shares of a company by an insider and the disclosure of the price sensitive information to the public from nine days to two days. This will be done by amending the Sebi (Prohibition of Insider Trading ) Regulations, 1992.
According to the draft guidelines released on Sebi website, an insider of a company will have to disclose information regarding acquisition and sale of shares to the company within one day of the transaction and the company, in turn, will have to report this to the stock exchanges within a day. Khushboo Narayan
JP Morgan launches open-ended bond fund
Mumbai: JPMorgan Asset Management India Pvt. Ltd on Monday announced the launch of JPMorgan India Active Bond Fund, an open-ended income scheme which opens on 9 June. “JPMorgan believes that fixed income should always form a part of every investor’s portfolio. Today, bonds are a good option as interest rates in India are likely to remain stable or come down, which will lead bond rates to rise,” a company release said. Staff Writer
Axis PE invests Rs142 cr in two firms
Mumbai: Axis Private Equity Ltd, or Axis PE, a company set up by Axis Bank Ltd, on Monday announced investments of Rs75 crore in Neesa Leisure Ltd and Rs67 crore in Corrtech International Private Ltd. Neesa Leisure develops and operates resorts and hotels under the “Cambay” brand name. Corrtech controls more than 30% of the market share in providing corrosion protection solutions.
“We are happy to partner with Corrtech and contribute to the growth of the Company,” Alok Gupta, MD and CEO said in a statement. Staff Writer
Great Offshore prunes plan to buy overseas rig firm
Bangalore: India’s biggest integrated offshore service provider, Great Offshore Ltd, has scaled down its plan to buy a controlling stake in an overseas company that is building two ultra deep-water oil drilling rigs.
“The economics of the project has undergone a significant change from what was originally envisaged. Hence, the board of directors of the company has decided to propose to the stakeholders of the overseas company to acquire one of the two rigs under construction by the overseas company,” Great Offshore said in a statement. The overseas company is yet to respond to the revised offer.
A company spokesman would not name the overseas firm or which of the two rigs being built by that company is being proposed to be acquired.
Mint understands from industry sources that the overseas company in question is the Cayman Islands-based SeaDragon Offshore Ltd. On 15 January, Great Offshore announced that it had made an offer for buying a controlling stake in an overseas company, which shall own, upon delivery, two harsh environment, semi-submersible, sixth-generation drilling rigs that are under construction at an estimated cost of $1.4 billion (Rs6,006 crore).
In a separate announcement on 16 January, SeaDragon Offshore said it had “received an outline offer” which is subject to certain conditions including results of a due diligence exercise, for a new equity investment of more than $250million.
“If the equity investment is made, it is expected that an offer will be made to existing shareholders to acquire their shares for a price, which is expected to be at, or around, $8 per share. Acceptance of the offer by all or any of the existing shareholders is not a condition of the subscription by the offeror for new equity,” SeaDragon had said in the statement, but did not name the firm that made the offer.
The first rig, due for delivery in the fourth quarter of 2009, has been rented out to Petroleos Mexicanos or PEMEX, the world’s third biggest crude oil producer, on a five-year, $958 million deal. The second rig is due in September 2010.
Great Offshore owns a fleet of 38 offshore ships of various types and two rigs. It is also building one more offshore vessel and an oil-drilling rig.
An acute shortage of deep-water oil drilling rigs has delayed the plans of India’s oil and gas explorers such as Oil and Natural Gas Corp. Ltd, Reliance Industries Ltd and Gujarat State Petroleum Corp. Ltd. P. Manoj
Allied Blenders ties up with Germany’s Henkell
New Delhi: Mumbai-based liquor firm Allied Blenders and Distillers Pvt. Ltd has formed a 50:50 venture with Germany’s Henkell and Sohnlein Sektkellereien KG to make German vodka brand Wodka Gorbatschow in India. The venture will launch the vodka in the local market by bottling it in Allied Blenders’ Aurangabad distillery.
Allied Blenders, which sells half a dozen liquor brands in the domestic market, posted a revenue of Rs900 crore in 2007-08. Its leading brand in the Indian market is Officers Choice whisky. According to the firm’s vice-chairman and chief executive Deepak Roy, Wodka Gorbatschow will be the first brand launch marking its alliance with Henkell in India. He said Henkell’s vodka is currently Germany’s biggest vodka brand and also the third strongest spirits brand there. The vodka will be priced at Rs570 for a 750ml bottle in India. C.H. Unnikrishnan
Sadbhav Engineering to buy 74% stake in OBCL
Ahmedabad:Sadbhav Engineering Ltd, through its wholly-owned subsidiary Sadbhav Natural Resources Pvt. Ltd, on Monday announced agreement to acquire a 74% stake in the Hong Kong-based Ocean Bright Corp. Ltd (OBCL) for an undisclosed amount. This will mark the company’s entry into the mining sector of Africa.
OBCL, directly and through its subsidiaries, holds 100% stake in prospecting rights and licences in Mozambique, where it has a licence for prospecting of iron ore and copper in 24,400 ha of land in Tete Province, limestone in 24,740 ha in Nampula Province, rights for prospecting of minerals for coal 5,320 ha in Manica Province and has also applied for prospecting rights of coal in 24,480 ha in Niassa Province.
Initially, the company is expected to invest about $25 million (Rs107 crore) in Mozambique. For mining operations, Sadbhav would create a set up different from its existing construction services business, both in Ahmedabad and Mozambique. Sunil Raghu
NPPA fixes prices of two more important drugs
New Delhi: India’s drug price regulator, the National Pharmaceutical Pricing Authority (NPPA), has fixed the prices of two more drugs under a crucial public interest provision, which has irked various drug makers in the past.
In an order dated 4 June, NPPA has fixed the prices of Dr Reddy’s Laboratories Ltd’s blood pressure drug Enam 5 for Rs42.54. The regulator has also capped the prices of 500ml Sodium Lactate Injection IP, manufactured by Nirma Ltd at Rs46.20 citing the same provision. NPPA has already fixed the prices of two dozen new medicines and is generally scanning the Rs34,000 crore domestic market more closely for violations.
The regulator has also fixed and revised the prices of 438 formulations, including various combinations of painkiller medicines such as analgin, aspirin, ibuprofen, multivitamins and anti-infectives such as doxycycline. Bhuma Shrivastava
BSNL to offer bundled mobile handsets
New Delhi: India’s largest phone firm by revenues Bharat Sanchar Nigam Ltd (BSNL) will bundle its CellOne-branded GSM cellular phone service with phone handsets of DigiBee Mobile Ltd, a Bangalore vendor.
The handsets will be available at BSNL outlets packaged with SIM (subscriber identification module) cards that will be locked in on the CellOne service for 15 months with a minimum of Rs100 recharge every month for prepaid customers and the same amount being billed for post-paid customers.
The state-owned company is also offering computers and laptops made by HCL Infosystems Ltd along with a broadband connection billed at between Rs475 and Rs625 a month for two years. R. Jai Krishna
Exim Bank extends $25 million LC to Syria
Mumbai: Export-Import Bank of India, or Exim Bank, has extended its first line of credit, or LC, of $25 million (Rs107 crore) to West Asia.
The line of credit to the government of the Syrian Arab Republic, for financing export of goods and services from India, was extended to reimburse 90% of contract value to the Indian exporters, according to a release by the bank. India’s export to Syria in 2006-07 stood at $408 million, an increase of 47.5% over the previous year, the bank said. Staff Writer