New Delhi: The Ruia family that runs Essar may have got its way in negotiations withVodafone Group Plc, said sources close to the development, refusing to be named.
Ravi Ruia, vice-chairman of the Essar group, will be appointed non-executive chairman of mobile telep-hony company Hutch-Essar, they said.
Vodafone recently acquired a 67% stake in Hutch-Essar from Hutchison Telecom International Ltd for $11.7 billion (Rs51,480 crore); the Ruias own a 33% stake in Hutch-Essar and had themselves bid for HTIL’s stake in the telecom firm.
However, Vodafone would retain management control of Hutch-Essar, said the sources. Arun Sarin, they added, would be vice-chairman of the company, and Asim Ghosh, the current chief executive officer, would continue in that post.
The sources also said Vodafone had agreed to a four-year put option at an enterprise value of $18.8 billion with Essar. This would mean that Essar can go back from the Hutch-Essar deal anytime in the next five years by selling its 33% stake in the company to Vodafone for around $6.2 billion.
The put option will provide Essar with the ability to raise an amount equal to its stock value in debt. The reconstituted Hutch-Essar board, sources said, would have have nine directors, with three of them being Essar’s representatives. The existing board has 11 members, four of whom—Ravi Ruia, Anshuman Ruia, Prashant Ruia and Vikas Saraf—are representatives of Essar.
The sources also said executives from Essar had met with officials at India’s foreign investment promotion board, which monitors and regulates foreign investment in companies, to offer their consent to the deal. When contacted, a Vodafone representative in India denied to comment.