Mumbai: Vodafone Group, the world’s largest mobilephone company, and Essar Group, the Mumbai-based, oil-to-telecom conglomerate, seem to have made peace for now.
Both the companies have decided to form a team involving merchant bankers, lawyers and other professionals from both sides to look into the terms to stay invested in Hutchison Essar, the fourth-biggest cellular company in India, in which Vodafone acquired a two-thirds stake on Sunday for $11.1 billion.
The team has been formed after Vodafone’s chief executive Arun Sarin met with the Ruia family, promoters of the Essar Group, at their Mumbai residence. “We are trying to iron out the issues and, in due course, we will make the final proposal for the partnership,” Sarin said after the two-and-a-half-hour meeting.
A merger of BPL Mobile’s Mumbai circle, currently owned by Essar, into Hutchison Essar is one of the key issues to be addressed.
Another issue to be sorted out is the guaranteed price on the 33% stake Essar holds in the target as also other terms and conditions in the shareholders’ agreement.
Essar vice-chairman Ravi Ruia clarified that his group did not intend to exit the business. “We are clear that Essar is a long-term player in the telecom industry and we have no plans to exit this company or business,” he told reporters.
The Ruias had earlier said that they were considering all options, including an exit from the Hutchison Essar business. Vodafone had announced its offer to buy out the Ruia stake at the same price it had offered for the 67% stake of Hutchison Telecommunication International Ltd (HTIL).
The Ruias claim to have right of first refusal in HTIL’s sale of its stake to Vodafone.
Of the 67% held by HTIL in Hutchison Essar, 15% is owned by representative shareholders New Delhi businessman Analjit Singh and Hutch managing director Asim Ghosh.