Vodafone, Essar differ on offer of partnership
12 February 2007
After winning the auction bid for Hong Kong-based Hutchison Whampoa's stake in Hutch-Essar, Vodafone is now attempting to persuade Essar to sell its 33-per cent stake in the venture, while the Essar Group claims that it has been invited to stay as the minority partner by the UK firm.
Last month, Arun Sarin, CEO, Vodafone had called Essar a "natural partner" by virtue of its stake in Hutch-Essar.
However, Vodafone has now clearly stated that it wants to buy out Essar's stake, while adding that HTIL's existing partners, who between them hold a 15 per cent stake in HEL, have agreed to retain their holding and become partners.
While announcing its acquisition of Hutchison Telecom's stake in Hutch-Essar, Vodafone offered to buy out Essar as well from the venture at the same price. If Essar decides to exit it could net over $6 billion based on an enterprise value of $18.8 billion offered by Vodafone.
Essar Group vice chairman Ravi Ruia and managing director Prashant Ruia were in London, from they issued a statement saying that they were evaluating all options in the best interest of the Group.
According to the statement, Vodafone aims to gain full operational control over Hutch-Essar with a 52 per cent stake following completion of the deal, while its local minority partners would increase their combined stake to 26 per cent if Essar decides to accept the British firm's offer.