The Hindu Business Line : Essar Teleholdings acquires 3.43 pc more in Hutchison for Rs 267 cr

ESSAR Teleholdings' stake in Hutchison Essar has risen to 30.42 per cent from 26.99 per cent, the company having acquired an additional stake of 3.43 per cent in the latter for Rs 267 crore.

The acquisition, which was made on June 30, resulted when Essar Teleholdings (ETHL) exercised its option to buy out Usha Martin Telematics' stake in Hutchison Essar.

The purchase follows an agreement between Hutchison, Essar and Usha Martin Telematics Ltd, wherein Essar had the option to purchase 3.43 per cent of Hutchison Essar at the original acquisition price for the Kolkata licence plus a carry cost, said a news release from ETHL. Essar had an option to acquire this stake until June 30.

Usha Martin Telematics is owned jointly by Kotak and Hutchison.

Commenting on the transaction, Mr Vikash Saraf, CEO, ETHL said, "This acquisition is part of our decision to enhance our stake in the consolidated entity and also reflects the strong relationship between Essar and Hutch."

ETHL also recently acquired a 9.9 per cent stake in BPL Mobile in their Mumbai circle.

The transaction cost of Rs 267 crore for a 3.43 per cent stake works to a valuation of Rs 7,800 crore for the Hutch-Essar group, taking the most simplistic approach, said an analyst. This is not taking into account the fact that the promoters may not transact at the objective valuation price of the company.

Market watchers say the transaction could be a preparatory exercise in the run up to an initial public offering of the Hutch-Essar group, which is expected some time this year.

ETHL is part of the Essar group and is a holding company for the group's telecommunication investments.

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