Ambani brothers reconciliation bid props up shares1 min read . Updated: 24 May 2010, 10:05 AM IST
Ambani brothers reconciliation bid props up shares
New Delhi: Shares in firms controlled by India’s billionaire Ambani brothers rallied on 24 May after the brothers ended a non-compete agreement, taking a step towards reconciliation in their long-running feud.
The brothers will now be free to compete on each other’s turf, with the exception of gas-fired power plants, removing a source of friction between the two conglomerates -- Reliance Industries (RIL) and Anil Dhirubhai Ambani Group (ADAG).
“We believe the new agreement is positive for RIL, as it opens up opportunities for growth in new sectors within India," Goldman sachs analysts wrote in a note.
“But, given the competitive landscape in telecom, financial services etc., any potential entry by RIL could be in the form of co-operation with ADAG or via industry consolidation, in our view," they wrote.
Shares in energy major Reliance Industries, India’s most valuable firm at $73 billion and controlled by elder sibling Mukesh Ambani, were up 3.5% at Rs1,030.90 by 0415 GMT after rising as much as 5.3% in early deals.
Anil Ambani-controlled Reliance Communications, India’s No. 2 mobile phone operator, rose 6.1% to Rs141.50, while Reliance Natural Resources jumped 20%.
Reliance Natural had a gas dispute with Reliance Industries and India’s highest court on 7 May ordered the brothers to renegotiate within six weeks a private natural gas supply contract between the two companies.
The two brothers are estimated to be worth a combined $43 billion and both live in Mumbai but had not been on speaking terms during their dispute.
They split the business empire inherited from their father Dhirubhai Ambani in a 2005 deal brokered by their homemaker mother, Kokilaben.
As part of their agreements announced on Sunday, Reliance Industries will not enter the gas-based electricity generation business before 1 April, 2022, with an exception made for its captive gas-based power plants, the groups said.
Shares in financial services firm Reliance Capital, controlled by Anil Ambani were up 5.5% at Rs676.80 ($1=46.6 rupees).