Vodafone's Sarin says formal bid for Hutchison Essar 'some weeks away' UPDATE |
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Published
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Wed, 10 Jan 2007 11:25
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(adds more details, background, share price)LONDON (AFX) - Vodafone Group chief executive Arun Sarin will table a formal takeover offer for Hutchison Essar, India's fourth biggest mobile operator, in a matter of weeks, a Vodafone spokesman said.Following a meeting with an Indian trade minister in New Delhi earlier today, Sarin told waiting reporters a formal offer for Hutchison Essar was 'some weeks away', the spokesman said.Sarin went on to describe his talks with Kamal Nath, the country's Commerce and Industry minister, as 'fruitful', in that they clarified the rules governing foreign direct investment (FDI) in India, the spokesman said.He is on a three-day trip to India to explore the group's interest in buying the 67 pct stake in Hutchison Essar, put up for sale by Hong Kong conglomerate Hutchison Whampoa late last year.India is one of the world's fastest growing mobile phone markets, and Vodafone is looking to build a bigger presence in the country as growth in its traditional European markets slows.However, Vodafone is not alone in coveting Hutchison's 67 pct stake, which cold be fetch up to 14 mln usd. India's second largest mobile company, Reliance Communications, and conglomerate Essar, which controls the other third of Hutchison Essar, are both looking to snap up the holding controlled by Hutchison Whampoa.While in India, Sarin is expected to meet other government ministers, whose approval he may need in the weeks to come. Under local FDI rules, overseas firms cannot own more than 74 pct of Indian telecom companies.Further complicating matters is Vodafone's 10 pct stake in Bharti Airtel, which is India's biggest operator.Sarin reportedly met Bharti Airtel chairman Sunil Mittal during his visit to India, with a view to freeing the UK firm from a one-year non-compete clause for a penalty fee.It is understood Vodafone started due diligence on Hutchison Essar earlier this week, and has appointed Ernst & Young and UBS as advisers.Hutch Essar has a share of around 16 pct of India's mobile market, behind Bharti Airtel's 21.5 pct slice. Reliance's 20.4 pct share puts it above state-owned Bharat Sanchar Nigam's 16.5 pct portion.The Indian government expects the mobile market to mushroom to 180 mln users by the end of 2007, compared with just over 140 mln currently.Analysts have put a value of between 18-20 mln usd on Hutchison Essar.simon.duke@afxnews.comsd/slm/sd/amCOPYRIGHTCopyright AFX News Limited 2006. All rights reserved.The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News.AFX News and AFX Financial News Logo are registered trademarks of AFX News Limited
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Vodafone's Sarin says formal bid for Hutchison Essar 'some weeks away' 