Essar Bends Vodafone And Hutchison Over A Barrel

The price for Essar playing nice with Vodafone and Hutchison has now become apparent — TelecomWeb reports that rather than argue with the Indian company and have the $11.1 billion sale possibly held up indefinitely in the courts Hutchison has agreed to pay Essar $415 million. Hutchison has “agreed to pay Essar $373.5 million at the closing of the transaction with Vodafone, and a further $41.5 million and interest ‘on the occurrence of certain events but in any event no later than the second anniversary’. It gave no hint as to what those events are.” Hutchison apparently agreed to the deal because it needs the cash to satisfy its shareholders — the payment will come out of the fund for expansion in SE Asia rather than the special dividend. Vodafone will have control of the combined company, getting seven seats on the board while Essar gets four and one goes to Indian businessman Analjeet Singh who, together with Hutch Essar CEO Asim Ghosh, owns 15 percent of the company. Vodafone also has rights of first refusal if they decide to sell their shares.
So the big winner in this whole deal was Essar, who got the $415 now as well as the right to sell between $1-5 billion worth of shares to Vodafone at a set price any time in the future. No wonder Arun Sarin was confident they would be friends…
Related stories:
Agreement Reached For Vodafone Essar
Hutchison Agrees To Vodafone’s Indian Offer

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