Piramal Healthcare acquires 5.5-% Vodafone Essar stake for $640 million

Piramal Healthcare chairman Ajay PiramalDrug-maker Piramal Healthcare has picked up a 5.5-per cent equity stake in Vodafone Essar Ltd, the Indian unit of world's second-largest mobile operator after China Mobile, Vodafone Group Plc, for $640 million (nearly Rs 2,900 crore).

This deal values the GSM operator at $11.6 billion, even though, the companies did not reveal valuations for the Indian operator. Piramal Healthcare share prices which opened lower were trading up by 1.15 per cent at 9.19 a.m.

The transaction contemplates various exit mechanisms for Piramal, including both participation in a potential Initial Public Offering (IPO) of Vodafone Essar and a sale of its stake to Vodafone, Vodafone Essar said in a statement.

Piramal Healthcare would purchase the shares from ETHL Communications Holding Ltd, while there is also an option to sell the stake back to Vodafone, it said.

The transaction follows the settlement between Vodafone and Essar over the sale of Essar's approximately 33-per cent stake in Vodafone Essar, announced on 1 July 2011, it added.

On 1 July  Vodafone announced that it would pay $5.46 billion, as against $5 billion decided earlier, for purchasing Essar's 33-per cent holding in Vodafone Essar. After buying Essar's stake, Vodafone's shareholding in Vodafone Essar would rise to 75.35 per cent, exceeding the doreign direct investment (FDI) limit of 74 per cent.