After months of rumor, innuendo and articles based on anonymous sources Associated Press has reported that Vodafone CEO Arun Sarin “said that his company will soon make a firm bid for Hong Kong-based Hutchison Whampoa’s controlling stake in a leading Indian mobile phone company”. He’s in India at the moment talking to the government about a purchase (there are issues with the level of foreign ownership of Indian companies), and has reportedly approached Hutchison with an offer that values the Indian operations at between $17-18 billion. Some Vodafone shareholders have expressed concern that the company will get caught up in a bidding war that will see it overpay for Hutchison Essar, so it will be tricky for Sarin to raise that offer if he needs to.
Essar, the minority partner of Hutchison Essar, is also interested in bidding and claims it has first right of refusal. Hutchison Whampoa disputes this, claiming that “Essar’s right of refusal ‘exists in a limited case of a sale to certain specific Indian telecom operators…Essar has ‘no right of first refusal over any other buyers’.” Essar claims it has first refusal rights against any bid, which seems to set the stage for a legal showdown.
The other parties interested in bidding are Reliance Telecommunications (India’s second-largest mobile company) and the Hinduja Group (also looking for a stake in Telecom Italia) from India, while Maxis Communications of Malaysia and Orascom of Egypt have also expressed an interest. Private equity groups have probably pulled out, saying they would not bid more than $15 billion.
Vodafone’s formal bid will be some time in February if Sarin gets his way.
Related stories:
–More Hutchison India Sale Rumors
–Hutchison Rumors Becoming Scams?
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