New Delhi / Mumbai: A bitter, simmering feud between estranged billionaire Ambani brothers burst into the open once again with younger sibling Anil Ambani’s Reliance Communications Ltd accusing Mukesh Ambani’s Reliance Industries Ltd, or RIL, of trying to sabotage ongoing merger talks with South Africa’s MTN Group Ltd.
In an angry press release late Friday evening, Reliance Communications claimed that Reliance Industries wrote to MTN making a “false claim” that it had “right of first refusal to buy the controlling stake” in the Indian phone company. The claim, Reliance Communications said, was “legally and factually untenable, baseless, and misconceived”.
The dispute stems from a relatively secret 12 January 2006 agreement that followed the two brothers parting ways in June 2005, dividing up a business empire created by their father Dhirubhai Ambani. While not disputing the existence of the document, Anil Ambani’s side has maintained that it was signed primarily by executives with allegiance to his older brother and hence not valid.
“RIL has based its claim on an agreement of January 12, 2006, which was unilaterally signed only by RIL’s officials, when RCom was under RIL’s control, under a procedure which the...Bombay High Court, vide its judgement dated 15th October 2006, has held to be ‘unfair and unjust’,” the Reliance Communication statement added. That judgement, in turn, has been appealed by Reliance Industries.
A person close to the situation said the right of first refusal that Reliance Industries was claiming was based on an agreement signed by two of that company’s executives, one of who wrongly represented Anil Ambani. “Even when the Adag (Anil Dhirubhai Ambani Group) was being formed, two RIL officials, L.V. Merchant and Sandeep Tandon, signed the agreement. The first for Mukesh Ambani and the second for Anil,” this person said. Merchant and Tandon are directors with Reliance Industries group companies.
The agreement was drafted at the behest their mother Kokilaben Ambani who, in turn, asked ICICI Bank Ltd chief K.V. Kamath to make a blueprint to divide the family empire, supported by ace investment banker Nimesh Kampani. The split also provided for a 10-year non-compete agreement, which barred both brothers from entering each other’s existing businesses.
The market capitalization of RIL and major group companies total Rs4.1 trillion, while Anil Ambani’s firms are valued at Rs2.47 trillion. Calls to Reliance Industries for comment went unanswered.
Reliance Ind: acting in good faith on ADAG, MTN
Mumbai: India’s Reliance Industries said it had in good faith informed the Anil Dhirubhai Ambani Group (ADAG) and South Africa’s MTN Group over an agreement on ADAG company Reliance Communications.
Reliance Communications had earlier said Reliance Industries (RIL) had claimed first right of refusal to buy a controlling stake in it, but the mobile operator said this would not delay its tie-up talks with MTN.
“RIL has in good faith notified both Anil Dhirubhai Ambani Group and MTN group of the stipulations contained in an agreement, the validity of which has never been questioned so far by ADAG,” a Reliance Industries spokesman said when asked for reaction to the Reliance Communications statement.
He did not elaborate on what the agreement contained.
Reliance Industries is controlled by Mukesh Ambani and ADAG is controlled by Anil Ambani.
The estranged brothers, ranked the world’s fifth and sixth richest men respectively, split their father’s business empire after a protracted public dispute.