Financial Daily from THE HINDU group of publications
Tuesday, Apr 11, 2006
Financial Daily from THE HINDU group of publications Tuesday, Apr 11, 2006 |
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Telecommunications Info-Tech - Mergers & Acquisitions Corporate - Corporate Disputes Aditya Birla group to buy out Tata stake in Idea Our Bureau
Dispute ends Aditya Birla group now owns 98.3 per cent stake in Idea, which is likely to come down to 65 pc soon. Tatas and Aditya Birla group likely to withdraw complaints to DoT.
Mumbai , April 10 The Aditya Birla group will acquire the entire 48.14 per cent stake of the Tata group in Idea Cellular for Rs 4,406 crore, or over Rs 40 a share, bringing to an end the two groups' dispute over the fifth largest cellular operator in the country. This values Idea at around Rs 9,200 crore, according to analysts. With this acquisition, the Aditya Birla group will be in almost total control of Idea Cellular, with a 98.3 per cent stake in the company. This stake will reduce to 65 per cent shortly, the intention being to place 33 per cent equity with financial investors, according to a statement from the group. Aditya Birla Nuvo and its subsidiaries will acquire 15 per cent stake in Idea, its board of directors decided today; and the unlisted company Birla TMT Holdings Pvt Ltd will acquire the remaining 33.14 per cent stake that will be placed with financial investors "on the same terms." "The group does not want to over-invest itself in the company," said an official who said that talks were on with several financial investors. Apparently the Tata group had an offer for its stake from Malaysian company Maxis Communications Berhad and had to offer the Birlas the first right of refusal, which they exercised. The two groups, it is understood, will be withdrawing their complaints to the Department of Telecommunications. The Birlas had complained that the Tatas had not disclosed their acquisition of a Mauritius-based company which had a stake in Idea and that the Tatas were in competition with Idea in other circles where Tata Teleservices had licences, this being against the regulations. The Tata group in turn complained of breach of shareholders agreement on the part of the AV Birla group and even said they would buy out the Birlas' stake in Idea.
Tatas to make tidy profit
The Tatas who, from all calculations, have invested between Rs 1,250 crore and Rs 1,500 crore in Idea Cellular (together, the Birlas and Tatas have invested Rs 2,500 crore in equity), would be making a tidy profit from this sale at Rs 4,406 crore, said analysts. The dispute with the Birlas was clearly over valuation, said sources, as the Tatas' intention to move out of Idea was never in doubt. Officials at Bombay House have for some time now been insisting that Idea remains only a financial investment for the Tatas, whose heart lay in the future of Tata Teleservices. Last year, Telekom Malaysia Bhd and Singapore Technologies had made an abortive bid to acquire 47.7 per cent stake in Idea for $380 million (over Rs 1,700 crore).
Related Stories: More Stories on : Telecommunications | Mergers & Acquisitions | Corporate Disputes
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