Essar opts out of telecom deal with Warid in Africa
15 June 2011
The diversified Essar Group has decided not to push ahead with a deal to buy into Dhabi Group's telecom business in Uganda and Congo, the group said today.
Essar had in 2009 agreed with Dhabi Group to buy a majority stake in Dhabi companies Warid Telecom Uganda and Warid Congo SA with an enterprise value of $318 million, but it has apparently changed its mind.
The assets are now being returned to Warid, which will have to pay back Essar.
Reports said the deal fell through because required approvals were not received. However, other observers see it as part of a strategy by the group to move away from the telecom business.
The Essar Group, controlled by billionaire brothers Shashi and Ravi Ruia, is also divesting its 33-per cent stake in Vodafone Essar, the mobile phone joint venture in India. The UK-based operator is paying $5 billion to buy Essar out.
"It was mutually decided between the partners - Essar and the Warid Group - not to proceed with the deal closure as certain condition precedents pertaining to government clearance were not met," Essar said in a statement.
However, contradicting press reports, it said that it is not evaluating any sell-off options in Kenya. "Essar remains committed to the African market and is satisfied with its operations in Kenya," it said.