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Vodafone says ‘no objection’ with Essar IPO

Vodafone says ‘no objection’ with Essar IPO
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First Published: Sun, Jan 23 2011. 06 07 PM IST
Updated: Sun, Jan 23 2011. 06 07 PM IST
Mumbai: British telecoms firm Vodafone said on Sunday it had not blocked Essar from conducting an initial public offer (IPO) of the latter’s stake in Vodafone Essar, India’s third-largest telecoms company by subscribers.
“We have no objection if Essar wishes to go for an IPO of its stake in Vodafone Essar,” the British company said in a statement.
Vodafone and Essar have locked horns in recent days over the Indian group’s move to merge a firm that owns an indirect 11% in their mobile joint venture with another Essar group firm, India Securities Ltd (ISL).
Essar has said in 2010 it wanted to list Vodafone Essar by offering its shares through an IPO but Vodafone “ensured that the IPO did not go through and no market value could be established”.
The Indian firm also accused the British telecoms giant of trying to force it out of their joint venture.
Shares in ISL, which is Essar group’s financial arm, have risen more than tenfold in the past 12 months.
Vodafone had objected to the merger between the two Essar group firms on 18 January, saying ISL’s value may be inaccurately used to calculate the value of its Indian telecom joint venture Vodafone Essar.
Vodafone said in a statement that material information has not been provided to the market regarding the merger scheme and it has raised objections with the Madras High Court, the Bombay Stock Exchange (BSE) and stock exchange regulator Sebi.
Vodafone paid $11.1 billion in 2007 for a 67% stake in the firm.
The deal gave Essar the option to sell its entire 33% stake for $5 billion by May 2011, or part of it at a market-determined price.
Vodafone has an agreement with Essar that gives it first option to buy out the Indian company’s stake if some or all of the holding is put up for sale.
The decision to exercise either put option on or before 8 May, 2011, is entirely the choice of Essar, Vodafone said in the statement.
Shares of India Securities closed at 63.35 rupees on Friday, down 3.58% in the BSE.
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First Published: Sun, Jan 23 2011. 06 07 PM IST