Company board mandates Arun Sarin to pursue deal
The India call
Vodafone isunderstood to have agreed to pursue a bid for Hutchison Essar of more than $13.5 billion, which would make it the largest purchase by Mr Sarin.
New Delhi, Dec. 22
Vodafone, the world's second largest cellular company by subscribers, has confirmed that it is interested in buying controlling stake in Indian mobile company Hutchison Essar.
The Vodafone Board, which met on Thursday, has mandated the company CEO, Mr Arun Sarin, to go ahead with the move to acquire Hutchisons Telecommunication's Indian stake, paving the way for an intense battle with Reliance Communication, which is also eyeing the company.
The UK-based telecom major said in a statement on Friday that the process was at an early stage, which may not lead to a transaction. The company has appointed UBS as its advisor.
"The Board of Vodafone continues to believe the mobile market in India has great potential and is, therefore, considering the acquisition of a controlling interest in Hutch Essar," Vodafone said in a statement.
Vodafone has also informed Bharti Airtel about its interest in acquiring stake in rival cellular firm Hutch Essar. Vodafone has 10 per cent stake in Bharti, which it may have to sell if it goes ahead with the Hutch deal due to a non-compete clause.
The move is in line with Vodafone's strategy, headed by Mr Sarin, of abandoning saturated markets or where it doesn't have majority stakes and seeking selective acquisition opportunities in developing markets.
Vodafone, last month, sold its 25 per cent stake in Proximus in Belgium. Earlier this week, it agreed to sell its entire quarter stake in Swisscom AG's mobile unit. On the other hand, Vodafone has picked up stakes in emerging markets including Turkey, Egypt, South Africa, China and Romania.
Under Mr Sarin, Vodafone acquired the stake in Bharti for $1.5 billion in December 2005 and Turkey's Telsim Mobil Telekomunikasyon Hizmetleri AS for $4.55 billion in May. Vodafone is understood to have agreed to pursue a bid for Hutchison Essar of more than $13.5 billion, which would make it the largest purchase by Mr Sarin.
Meanwhile Reliance Communications has asked banks led by Citigroup Inc to lend almost $14 billion to fund a buyout of Hutchison Essar. Other companies in the race include Malaysia-based Maxis and Egypt-based Orascom.
Hong Kong-based Hutchison Telecommunications, which holds 67 per cent stake in Hutch Essar, said it had been approached by "various potentially interested parties regarding a possible sale of its equity interests in Hutchison Essar, No agreement in respect of such possible sale has been entered into. There is no assurance that a sale may result from these approaches." Industry sources said that Vodafone could make the first bid as early as next week.Related Stories:
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