HUTCH DEAL

Blackstone, Reliance plan $14bn bid for Hutch
SINGAPORE/BANGALORE: Blackstone Group and Reliance Communications may offer at least $14bn for Hutchison Essar Ltd (Hutch Essar), India’s fourth-biggest mobile phone operator, two people with direct knowledge of the talks said.

Blackstone, manager of the world’s largest buyout fund, and Reliance, India’s second-ranked mobile company, may next week submit a bid to Hong Kong billionaire Li Ka-Shing, 78, and Essar Group, the sources said, declining to be identified before an official announcement. UBS is financing the bid, they said.
The purchase will give Reliance Communications 50mn customers, an increase of 78%, in the world’s fastest-growing mobile phone market. India’s telecommunications industry is forecast to add more than 350mn users by 2010.

“If the bid is successful, then the combination between Reliance and Hutchison Essar would create the single-largest mobile operator in India in terms of subscribers,” said Alexander Chia, associate director at Standard and Poor’s in Kuala Lumpur.

“The market promises high growth rates for many years.”
Hong Kong-based Hutchison Telecoms has been looking to sell telecommunications assets. This month, it completed the sale of its Hong Kong fixed-line business to affiliate Vanda Systems & Communications Holdings, generating HK$1.3bn ($176mn) in one-time gains.

The company has also said it plans to sell shares in its Indian unit in an initial public offering. A sale of Hutch Essar may lead Li’s company to exit the Indian market, where it has been embroiled in a dispute with Essar Group over an attempt to buy some of the Mumbai-based company’s wireless operations.
The Wall Street Journal on December 7 reported that Texas Pacific Group may make an $8bn offer for Li’s stake in Hutch Essar. Carlyle Group and Kohlberg Kravis Roberts & Co are also in talks, the Press Trust of India reported yesterday, without saying where it obtained the information.

“The sort of prices that are floating around don’t make any sense, they are completely speculative,” Hutch Essar managing director Asim Ghosh said on Thursday. “I can’t take such discussion seriously.”

Carlyle’s Washington-based spokesman Chris Ullman was traveling and unavailable for immediate comment. Texas Pacific’s New York-based spokesman Owen Blicksilver and KKR’s New York- based spokeswoman Ruth Pachman declined to comment.

Blackstone and Citigroup are in separate talks with the Indian government to start a $5bn infrastructure fund, Arvind Mayaram, joint secretary at the Ministry of Finance in New Delhi, said today.

Interest in the Indian telecommunications market is increasing, with Citigroup and Providence Equity Partners Inc having this year bought stakes in Idea Cellular Ltd, an Indian mobile-phone operator owned by the Aditya Birla Group.
Only 16.6% of the nation’s 1bn people have either a mobile or fixed-line phone, according to the Telecom Regulatory Authority of India said. A record 6.79mn new mobile phone users were added last month, fuelled by an economy that Credit Suisse forecasts will expand 10% next year, faster than China. – Bloomberg

:tea:
 

love_gundu22

MP Guru
Anil gears up to buy Hutch-Essar

Anil gears up to buy Hutch-Essar

New Delhi: Anil Ambani group firm Reliance Communication Ltd is all set for its bid to acquire Hutch-Essar, India's third largest private cellular operator.

The company is in talks with four global private equity funds - Blackstone, Texas Pacific Group, Carlyle and Kohlberg Kravis Robert and Co (KKR) - to make a bid for Hutch-Essar.

The company has mandated UBS as its advisor for raising debt and resources.

According to sources Reliance Communication (RCL) may raise an additional $4-5 billion from the market for the bid.

RCL is interested to retain up to 80 per cent in Hutch-Essar, which it is seeking to acquire along with four global private equity players.

Reliance Communications has evinced interest in acquiring the entire joint venture and not merely 67 per cent stake held by Hutchison Telecom International Limited.

On Thursday, RCL concluded borrowing of $1 billion from the international market. The company has cash reserves of more than $1.7 billion.

However, RCL officials declined to comment on the development.

:tea:
 

vengabeats

Par 100 posts (V.I.P)
No monopoly ring in Hutch rush

NEW DELHI: As the scramble for Hutch intensifies, probable mergers come under scrutiny over the issue of monopoly in circles.



The merger and acquisition rules of the government do not allow any mobile telecom company to have more than 67% of the wireless market in any circle, to check monopoly.



An analysis by DNA Money shows that neither Reliance Communications nor Bharti will breach the clause in any circle, if they were to merge with Hutch Essar. Hutch Essar is actively considering proposals from domestic as well as international majors.



Going by the latest subscriber data, Reliance and Hutch Essar would have the maximum market share in Kolkata if they were to come together. With Reliance (including CDMA and GSM) at 27.8%of the wireless market share and Hutch at 25.2%, the merged entity would notch up 53% of the total mobile market in Kolkata. That is still some distance away from the cap of 67%.



Among the other circles where Reliance and Hutch together would have a large market share include Gujarat (52.2%), West Bengal (51.7%), UP East (48.2%), and Mumbai (46.6%).



Even as the largest mobile player Bharti has claimed that it’s not looking at acquiring Hutch, if the two biggies were to merge, the combined market share would be 51.2% in Karnataka. That’s the highest market share for the Bharti and Hutch combine in any circle. Nowhere else would the combined entity have over 50% of the market share.



Among the other circles where the combined entity of Bharti and Hutch would have an over 40% market share include Gujarat (49.5%), Punjab (46.9%), Delhi (43.2%), Kolkata (43.2%), Mumbai (42.9%) and UP East (40.7%).



While Reliance Communications, along with private equity players like Blackstone and Texas Pacific, is the front runner, there’s competition from UK’s Vodafone (which has a 10% stake in Bharti) and Malaysia’s Maxis. A few days ago, Bharti CMD Sunil Bharti Mittal had said, “nobody has approached us and we haven’t approached anybody”, when asked whether his company was a potential buyer.



While Hutch operates in 16 circles, it recently got licences for the remaining seven circles. According to the DoT rules, no merged entity in any circle would exceed 67% marketshare. “Any merger, acquisition or restructuring, leading to a monopoly market situation in the given service area, shall not be permitted. Monopoly market situation is defined as market share of 67% or above within a given service area, as on the last day of previous month. Subscriber base shall be the criteria for computing the market share.”



DoT diktat

No mobile telecom company can have monopoly in any circle

Monopoly market situation is defined as market share of 67% or above within a given service area

Subscriber base shall be the criteria for computing the market share

Source : DNA
 

rajesh_budhani

New member
Ruias may offer to buy out Hutchison

MUMBAI: The twists and turns in this tale would put a thriller maestro operating in top form to shame. No one’s willing to say so on the record, but there are strong indications that the Ruias may just be willing to turn their backs on Rs 28,000 crore and stay in the telecom market—at least in the near to - medium term.

On Monday, the investment banking community was abuzz with speculation that Ravi Ruia might be catching a flight to Hong Kong in the next day or two. There, if the grapevine is to be believed, he’ll ask the Hutchison Whampoa brass to let the Ruias exercise first right of refusal. In other words, the Ruias will ask Hutchison to offer them its 67% stake in their joint venture, Hutch Essar, before talking to anyone else. We asked the Essar spokesperson if this was true, he declined to comment.

As reported by TOI first, Hong Kong-based hyperbillionaire Li Kashing’s Hutchison has hired New York-headquartered global investment bank Goldman Sachs to midwife the sale of its holding in Hutch Essar. Goldman has apparently shortlisted telecom giant Vodafone, Anil Ambani’s Reliance Communications, Maxis of Malaysia, Egypt’s Orascom and the Ruias themselves.

There has been much talk of the bonanza the Ruias could potentially reap if they were to sell their 33% stake in Essar. Now it seems that they’re willing to shell out much more to stay in the game. Apparently the fact that the likes of Reliance and Vodafone may be willing to pay up to $18 billion has led the Ruias to believe that there is great future value in the company, and they may make even more money by unlocking it at some point of time in the future.

Telecom industry insiders point out that if the Ruias have a majority , indeed a 100% stake in Hutch Essar , this could enable them to flip it over to another bidder at an even more handsome profit.

In any case, money to buy out Hutchison apparently won’t be a problem. With Hutch Essar valued at $18 billion, the Ruias would need to raise about $12 billion to buy out Hutchison lock, stock and barrel. There are already awed whispers within the banking community about investment bank Bear Stearns—which has put together many telecom mega mergers around the world—offering the Ruias a comfort letter to raise $13 billion. With J M Morgan and Standard Chartered also reportedly advising the Ruias on how to tie up funds, raising $12 billion—that’s about Rs 56,000 crore—may not be such an insurmountable hurdle.

Interestingly, there has long been unconfirmed speculation that the Ruia brothers have differing world views on their investment in Hutch Essar venture.

Telecom industry insiders believe that Ravi has long wanted a greater say for the Ruias in Hutch Essar, while Shashi’s stance has reportedly been that with the Hutchison team doing a good job of building value, it doesn’t make sense for the Ruias to get involved.

Bankers believe that with Hutchison now having indicated a desire to exit Hutch Essar, Shashi might be willing to trade future uncertainty for current windfall.

Especially since the Ruia brothers do not have domain expertise in the services business (their three largest companies are in steel, oil and shipping). But, according to investment bankers, Ravi is said to be of the opinion that it makes more sense to stay invested in the explosively growing telecom market at this stage. After all, a windfall can always be reaped later




( if there is any mistake, then plz neglect it, as i m new to this webpage)
 

vengabeats

Par 100 posts (V.I.P)
Anil in exit mode?

HONG KONG/MUMBAI/KOLKATA: Anil Sarin of Vodafone is reportedly in Hong Kong. So is Ravi Ruia of Essar. Missing from the picture is the other widely-touted frontrunner for the takeover of Hutchison Essar - Anil Ambani.
Is the man who started the whole media buzz on the takeover of India’s fourth largest mobile company now having second thoughts?


This is the question everyone is asking as the global bidding war for Hutchison Essar, the Indian business of the Hong Kong-based Hutchison Telecom International (HTIL), moved decisively into the next phase on Wednesday as Vodafone CEO Arun Sarin and Essar vice-chairman Ravi Ruia flew into Hong Kong for crucial talks, sources in the telecom industry said.


The problem, clearly, is the sticker price. On Wednesday, a Hutchison Telecom spokesperson confirmed media reports that the company would only entertain offers “well in excess of $14 billion”, which effectively sets a base price for the deal.


The Financial Times had reported from London that HTIL had “dismissed” a $13.5 billion offer for Hutchison Essar, made last week by Malaysian telecom giant Maxis Communications and US private equity firm Texas Pacific Group.
But if HTIL’s 67% stake has to be priced upwards of $ 14 billion, the whole company will cost the buyer something like $20-21 billion. Anil Ambani cannot obviously buy only the HTIL stake since the Ruias will not play second fiddle.
As the asking price for Anil Ambani goes up, the wait-and-watch game of Reliance Communications (RCom) cannot be sustained any longer. Anil Ambani, say observers, will have to walk away.


Sources close to RCom said that though the group is not short on cash, any all-cash offer of $ 20 billion or more for a 100% acquisition of Hutchison Essar will not be prudent in terms of enterprise value.


This is especially so since RCom could anyway be close to the No 1 slot looking at its current rate of subscriber growth.


“Where’s the value-add that Hutchison Essar can bring to the table for Reliance?” asks one insider. So if the hands controlling the fourth largest mobile telephony player are slated to change, then it’s for the foreign players with practically no presence in the country to make a big enough bid for Hutch.
On the other hand, strategically it makes sense for an Anil Ambani to raise the stakes for all new bidders so that entry to the Indian market becomes an expensive proposition for the new entrant.


Many analysts also point out that RCom will gain little by committing huge sums for an acquisition. “It will not make sense to eliminate a rival by swallowing it, as the move clearly does not give the acquirer any pricing power or any clout with telecom equipment suppliers,” the analyst said.


What this means is that RCom may now be preparing the ground for a quiet withdrawal, having made the entry prohibitively expensive for whoever ultimately buys Hutch. A high price-entry, however, suits the Ruias, since this will give them a high exit bonus.


Ravi Ruia is currently in Hongkong accompanied by investment bankers, including those from JM Morgan Stanley and Standard Chartered. The Essars, who as existing partners with a 33% stake in the Indian joint venture have the first right of refusal, are reported to be keen to “buy out” HTIL’s 67% stake in Hutchison Essar. As partners of HTIL, only they have the necessary clout to bring down HTIL’s asking price.


Sarin’s reported arrival in Hongkong could not be independently confirmed. An HTIL spokesperson did not return calls seeking confirmation that talks with officials in Essar or in the UK-headquartered Vodafone, which is keen to acquire a controlling stake in Hutchison Essar, were imminent.


HTIL confirmed last week that it had been approached by “various potentially interested parties” regarding a possible sale of its equity interests in Hutchison Essar, but that “there is no assurance that a sale may result from these approaches.”


A telecom analyst in a multinational financial institution said on condition of anonymity that if the reports of Sarin’s and Ruia’s presence in Hong Kong were confirmed, “perhaps it’s a sign of which way the wind is blowing.” Even if the Ruias’ reported bid for a buyout of Hutchison doesn’t go through, they may prefer Vodafone since it would mean that they will continue to “run the show” in India, the analyst said.


BNP Paribas’ senior credit analyst (Asia Pacific) Vijay Chander says that irrespective of which of the bidders was considered a “better fit”, HTIL officials were “duty-bound” to their shareholders to recommend acceptance of the highest bid. “The market will speak, and one or other bidder could even now raise the stakes,” he added.



HTIL on Wednesday effectively set a benchmark for the asset sale, confirming media reports that the company would only entertain offers “well in excess of $14 billion.


Financial Times had quoted Hutchison finance director Frank Sixt as saying that the $13.5 billion bid made earlier in December by Maxis and Texas Pacific “is not a valuation that would excite us”. (Sixt’s comments had been made prior to HTIL’s statement last week acknowledging that it had been approached by various interested parties.)


Sixt further noted that “a lot of people are interested in having an Indian asset. We have one which we are very pleased with. And really there has not been anything that would rise to the level of being an offer capable of acceptance.”

Turning point

At $20 billion, the game is no longer worth it for Reliance Communications.


But Ambani benefits by pushing up the takeover price for new entrants.


Only Ruias have some leverage on how high HTIL will let bids go.



Source : DNA

 

love_gundu22

MP Guru
Essar, Vodafone open cards

Essar, Vodafone open cards

Ruias value Hutch-Essar at $16.5 bn, Vodafone $17 bn.

The Essar group, the joint venture partner in Hutchison-Essar Ltd, has offered $11 billion (about Rs 50,000 crore) for Hutchison Telecom International’s 67 per cent stake, pegging the venture’s enterprise value at $16.5 billion.

Vodafone, one of the world’s largest mobile operators, has submitted an offer valuing the company at $17 billion.

No comments were forthcoming from Essar, Vodafone and the Hong Kong-based Hutchison Telecom International Ltd.

Investment bankers close to the development said Vodafone had put in a bid that valued Hutchison-Essar at $17 billion. Vodafone had also told Hutchison Whampoa that it would spend another $2 billion after the acquisition, on expansion in India.

They added that Ravi Ruia, vice-chairman of the Essar group, had offered to pay $11 billion for Hutchison’s stake, valuing Hutchison-Essar at $16.5 billion.

Reliance Communications Chairman Anil Ambani today officially threw his hat into the ring by saying the acquisition of Hutchison-Essar fitted into his company’s growth strategy.

He said Reliance Communications had received commitments from financial institutions and private equity funds for financing a bid.

“A potential combination between Hutchison Essar and Reliance Communications would create tremendous value for shareholders.”

Ambani was reluctant to disclose details of the financing proposals he had received from P-E funds and institutions. On whether he would like to partner Essar, he said it was premature to comment. However, he said he had partners across the globe, such as Orascom in Egypt and Qatar Telecom in Qatar.

“Telecom’s is a borderless world and we are comfortable with any partner,” he added. The Ruias, promoters of the Essar group, are working out a deal in which its consortium of bankers would pick up between 20 per cent and 30 per cent of Hutchison’s equity.

Merchant banking sources said the bankers had expressed willingness to rustle up over $5 billion to buy equity directly. To buy the remaining portion of Hutchison’s equity, the bankers would fund the Ruias with debt.

By employing this strategy under which they had to buy only between 37 per cent and 47 per cent of the Hutchison stake, the Ruias might not need a large war chest of funds.

The valuation of the company, based on its enterprise value, had been going up and could vary between $17 billion and $21 billion, merchant bankers said.

Sources said that while the Ruias had begun discussions with the Hutchison brass, they were waiting for the latter to come up with an indicative price (based on what other aspirants like Reliance Communications, Vodafone, and Maxis offered) that they had to match or better.

“The Ruias have been talking to the Hutchison brass virtually twice a day, as they have the first right of refusal. Based on what other competitors offer, Hutchison will get back to them with the price they have to match. If they do, Hutchison might again go back to the other aspirants to see if they can increase their indicative bids.

This process could take some time,” merchant banking sources said.

Many international bankers are common to the various players in the race, having offered lines of credit to all of them — rather than going in for just one player.

However, Reliance had tied up deals with some merchant bankers exclusively as part of its strategy, sources said.

:tea:
 

gaurav200x

Gaurav Mittal
Re: Anil in exit mode?

Hi... nice article....

Does someone care to explain me that, since Ruias have only 33% stake, so how is the price for 67% of HTIL controlled by them?
 

vengabeats

Par 100 posts (V.I.P)
Valuation ‘mind-boggling’- Anil Ambaini

Is Anil Ambani still in the race for Hutchison Essar or distancing himself slightly from it? Here’s what he had to say:


“I’ve lost count of the number of private equity people that have lined up (to fund the Hutch buyout),’’ he told newspersons in Mumbai on Thursday. Money may not be the problem, but valuations could be. Ambani said he found the Hutch valuations “mind-boggling” and that Reliance Communications had its own “conservative” valuation. That sounds like he will back off if the price is too high. Here’s what he said, almost verbatim.


Interest in Hutch: “We have received financial support from banks and, as part of an overall growth strategy, (we) continuously examine several organic and inorganic opportunities for growth. Hutchison Essar is one such situation.”


Is $21 bn price worth it? “Numbers are speculative in nature and the valuation is mind-boggling. It is far more than what we can ever consume. There is no certainty on the Hutch Essar proposal - on when and how it will be completed. We are sure of our conservative estimate, but will not disclose it because we are in a competitive race.”


On the acquisition logic: “A potential combination of this nature could create compelling value for all stakeholders. The proposal for a Hutch Essar acquisition fits well into our GSM strategy.”


On teaming up with Essar: “It is premature and hypothetical. Matters really have to be resolved between the current shareholders (Essar & Hutchison Telecom of Li Ka-shing) before any third party, including Reliance, gets in.”


source : DNA
 

vengabeats

Par 100 posts (V.I.P)
Vodafone emerging Hutchison Essar frontrunner in bidding war


Submits bid valuing Indian operator at $18 billion


HONG KONG: British telecom major Vodafone may be emerging as the front-runner in the global bidding war for Hutchison Essar after it submitted a bid to parent Hutchison Telecom International that values India’s fourth largest mobile phone service operator at $17-18 billion, reckon telecom analysts in Hong Kong.



A rival “buyout bid” from the Essar group, which holds a 33% stake in the Indian joint venture and which has a right of first refusal, may be “less than appealing” to HTIL, they add. HTIL would not comment on reports that Essar group vice-chairman Ravi Ruia had on Tuesday made a $11 billion offer for HTIL’s 67% stake in the Indian JV, which would value the business at $16.5 billion.



“It isn’t just about valuations,” said an analyst here. Reports that the Ruias could use their “right of refusal” as a trump card to leverage their existing stake - and bring pressure on HTIL to sell out to them instead of to Vodafone or other potential bidders - are “overstated”, the analyst added.

Although the Essar group’s existing stake “carries a lot of weight”, it isn’t entirely clear whether its “trump card” - the right of refusal - can be invoked against a rival “foreign bidder”, the analyst added. This is all the more so since, given the current regulatory environment in India, a foreign bidder - like Vodafone - will in any case not be able to acquire all of Hutchison Essar, but only up to 74%.



“Even if the Ruia brothers’ views on a buyout were congruent - and they clearly aren’t - the trump card may not amount to more than a hill of beans,” the analyst added.



He was alluding to media speculation that the Ruia brothers - Shashi and Ravi - are divided about whether they should sell out and make the most of the current frothy valuations or stay invested. (Shashi is reported to be keen to bail out; Ravi is believed to be keen to buy out HTIL.)



The Financial Times reported on Thursday, quoting unnamed sources close to the negotiations, that Vodafone and Essar had made rival bids to HTIL for its 67% stake in Hutchison Essar. It quoted the sources as saying this was the first time Essar had formally discussed its interest in buying out HTIL’s holding.



“After weeks of sparring, this was the meeting when Essar was asked to put up or shut up,” the newspaper quoted one source as saying. “(Essar) has decided it wants to play.”


source : DNA
 

vengabeats

Par 100 posts (V.I.P)
Can a gridlock prove a deal-breaker?

Not likely, but it isn’t inconceivable in the race for Hutchison Essar

The contours of the proposed sale of Hutchison Telecom’s 67% stake in its Indian joint venture, Hutchison Essar, have become more and more complex with each passing day. And the specificities of the regulatory environment in India only add to the degree of complexity surrounding the proposed deal. In fact, says an investment banker in Hong Kong, “it isn’t entirely inconceivable” that the “spaghetti bowl of complications” could - in the worst case - cause the deal to unravel.


“I’m not saying it’s likely: all parties have a lot riding on this deal,” caveats the banker, speaking on condition of anonymity. “But it isn’t entirely inconceivable.”
In his estimation, one factor that could trigger such an extreme eventuality is an inability on the part of the joint venture partners - Hutchison and Essar — to reconcile their respective views on the conditions for the sale of Hutchison’s stake.


The Essar group’s formal expression of an interest in buying out Hutchison “complicates the plot”, the source added. “Let’s face it: they haven’t exactly gotten along like a house on fire,” he said, referring tangentially to manifest strains in the past between HTIL and Essar.


Reliance Communications chairman Anil Ambani’s statement on Thursday that his company is in the race, even if valuations were “mind-boggling”, means that there are at least three serious contenders: Vodafone, Essar and Reliance. (The first two are know to have submitted formal bids to HTIL.)


The names of other telecom majors like Maxis and Orascom continue to be bandied about, but not with the same intensity as the three players.


The regulatory environment in India may introduce an additional factor into the permutations and combinations.


For instance, under current rules, Reliance can either acquire 100% of Hutchison Essar, or only 10%. In other words, for Reliance to own all of Hutchison Essar, it needs the Essars’ goodwill.


And under current FDI regulations, Vodafone, the other serious bidder, cannot own more than 74%.


They, too, need an Indian joint venture partner - who for the moment is Essar. It is this factor that gives the Essars’ 33% stake disproportionate weight.
But, says the banker, “if the Ruias decide to be cussed about this and overplay their hand, anything could happen.”


Which is why Ambani, on Thursday, said that it was “premature and hypothetical” to talk of Reliance teaming up with Essar.


“Matters have to be resolved between the current shareholders before any third party, including Reliance gets in,” he had added.



Source : DNA

 

vengabeats

Par 100 posts (V.I.P)
Ruias corral stunning $25bn credit line

MUMBAI: The Ruia Brothers of the Essar Group is going for a biggie indeed. Foreign media reports on Monday said they have lined up pledges for an eye-popping $20 to $25 billion from a slew of investment banks.



The group, with a collective networth of $15 billion comprising a bulk of its telecom assets, wouldn’t need so much though, as it already owns 33% of the trophy firm Hutch-Essar.






A Financial Times report said on Tuesday Essar has received comfort letters from as Morgan Stanley, Standard Chartered Plc, Lehman Brothers Holdings Inc and Citigroup to arrange for the funds.





Sources at Essar declined to be quoted, saying the group is still in the process of organising the lead consortium and in all probability a few more banks are expected to join to help it mount the offer for buying out the Hong Kong billionaire Li Ka-shing’s stake in Hutch Essar.





On the flip side, the Ruia brothers are comforted by the fact that even if they lose the bid, they are bound to win.





This is because, the Essar group’s 33% stake will fetch them rich valuations from investors winning the bidding war.





For the moment though, the Ruias are busy lining up a huge tranche for making what is the most audacious bid ever in the history of Indian M&A.





“Our cards are open. We have an option to buy out, sell out or stay with the existing partner,” an Essar source said.





“It’s for Li Ka-shing’s Hutchison Telecom International to decide on the future course. Needless to mention, we have the right of first refusal,” the source added.





The net assets of the Essar Group are in the region of $6 billion, while its turnover excluding Hutch Essar is pegged at a more modest $3 billion.





And this is the very reason for the group to prepare for the eventuality of stake sale by Li Ka-shing.





When the shrewd Hong Kong tycoon gets the bid approach, the Ruias hope to be ready with their own counter.





“So far, Hutchison has not given any feelers or made its intentions public,” reveal Essar group sources.



Source : DNA

 

bonddonraj

MP Guru
yogin said:
Blackstone, Reliance plan $14bn bid for Hutch
SINGAPORE/BANGALORE: Blackstone Group and Reliance Communications may offer at least $14bn for Hutchison Essar Ltd (Hutch Essar), India’s fourth-biggest mobile phone operator, two people with direct knowledge of the talks said.

Blackstone, manager of the world’s largest buyout fund, and Reliance, India’s second-ranked mobile company, may next week submit a bid to Hong Kong billionaire Li Ka-Shing, 78, and Essar Group, the sources said, declining to be identified before an official announcement. UBS is financing the bid, they said.
The purchase will give Reliance Communications 50mn customers, an increase of 78%, in the world’s fastest-growing mobile phone market. India’s telecommunications industry is forecast to add more than 350mn users by 2010.

“If the bid is successful, then the combination between Reliance and Hutchison Essar would create the single-largest mobile operator in India in terms of subscribers,” said Alexander Chia, associate director at Standard and Poor’s in Kuala Lumpur.

“The market promises high growth rates for many years.”
Hong Kong-based Hutchison Telecoms has been looking to sell telecommunications assets. This month, it completed the sale of its Hong Kong fixed-line business to affiliate Vanda Systems & Communications Holdings, generating HK$1.3bn ($176mn) in one-time gains.

The company has also said it plans to sell shares in its Indian unit in an initial public offering. A sale of Hutch Essar may lead Li’s company to exit the Indian market, where it has been embroiled in a dispute with Essar Group over an attempt to buy some of the Mumbai-based company’s wireless operations.
The Wall Street Journal on December 7 reported that Texas Pacific Group may make an $8bn offer for Li’s stake in Hutch Essar. Carlyle Group and Kohlberg Kravis Roberts & Co are also in talks, the Press Trust of India reported yesterday, without saying where it obtained the information.

“The sort of prices that are floating around don’t make any sense, they are completely speculative,” Hutch Essar managing director Asim Ghosh said on Thursday. “I can’t take such discussion seriously.”

Carlyle’s Washington-based spokesman Chris Ullman was traveling and unavailable for immediate comment. Texas Pacific’s New York-based spokesman Owen Blicksilver and KKR’s New York- based spokeswoman Ruth Pachman declined to comment.

Blackstone and Citigroup are in separate talks with the Indian government to start a $5bn infrastructure fund, Arvind Mayaram, joint secretary at the Ministry of Finance in New Delhi, said today.

Interest in the Indian telecommunications market is increasing, with Citigroup and Providence Equity Partners Inc having this year bought stakes in Idea Cellular Ltd, an Indian mobile-phone operator owned by the Aditya Birla Group.
Only 16.6% of the nation’s 1bn people have either a mobile or fixed-line phone, according to the Telecom Regulatory Authority of India said. A record 6.79mn new mobile phone users were added last month, fuelled by an economy that Credit Suisse forecasts will expand 10% next year, faster than China. – Bloomberg


you are posting repeated posts and adding to sppaming ==this shall be considerd as a warning to you==
 

manjotdullat

Par 100 posts (V.I.P)
NICE Article

mp ROxs

thamX for such a nice post
label.jpg
 

vengabeats

Par 100 posts (V.I.P)
Hinduja joins race to buy stake in Hutchison Essar

A new twist in the race...............:SugarwareZ-064:

MUMBAI: India's Hinduja group said on Thursday it was interested in buying a stake in mobile phone operator Hutchison Essar Ltd, but was unlikely to settle for anything less than 51 per cent.



"We have expressed our intention to Hutchison and we are waiting for confirmation whether they want to sell the stake," Ashok Hinduja, executive chairman of Hinduja TMT Ltd. said.


"We are not interested in anything less than 51 per cent as we would like to hold a controlling stake," he said.



Britain's Vodafone Group and Reliance Communications have already expressed interest in buying a stake in Hutchison Essar.



Hutchison Essar, India's fourth-largest mobile phone firm, is 67 per cent owned by Hong Kong's Hutchison Telecommunications International. The other 33 per cent is controlled by Essar, a steel-to-shipping group controlled by the Ruia family, which itself is reported to want to buy some or all of the firm.
Hutchison has said it has received proposals to buy its stake but has not given details.



The Hinduja family, which runs the back office firm Hinduja TMT and bus and truck maker Ashok Leyland, used to hold a 5.1 per cent stake in Hutchison Essar but sold it to Hutchison last June for $450 million.



"When we sold it, Hutchison Essar was valued around $9.6 billion, let us see how much the seller wants. In transactions like these, there's always a premium to the market or intrinsic value," Hinduja said.



"Funding is not an issue. The Hinduja group is not leveraged at all."



S ource : DNA



 

vengabeats

Par 100 posts (V.I.P)
Verizon crops up in race for Hutch Essar

NEW DELHI: US-based Verizon Wireless may be yet another serious contender in the race for acquiring a significant stake in India’s fourth-largest cellular operator, Hutch Essar.





Industry sources are not ruling out the possibility of the world’s largest mobile player, Vodafone, bidding along with Verizon to match the price expectation of the ‘sellers’.





Verizon Wireless in the US is a joint venture of Verizon Communications and Vodafone, with the latter holding 45% stake in former. Company officials declined to comment on the matter.





While Hutch Essar is a GSM (global system for mobile communications) player, Verizon is a CDMA (code division multiple access) operator. However, Verizon has significant GSM plans.





If Verizon enters India, it will be the only American player to do so. It’s rival AT&T has a small play in India’s telecom market.





Analysts said Hutch Essar gives an opportunity for American and European players as their markets are saturated, unlike India, where the teledensity is just 17%.





As of end of November 2006, India had 143 million mobile phone subscribers, and a total of 183 million phone users (both fixed and mobile), with an average monthly addition of 6 million.





Verizon has 56.7 million wireless users in the US, while Vodafone, which operates across 27 countries, has 186.8 million worldwide.





Hong Kong-based Hutchison Telecom International Ltd (HTIL) had recently indicated that nothing less than a valuation of $20 to $21 billion would be acceptable to it.





While Malaysia’s Maxis (along with Texas Pacific) continues to be in the race for Hutch Essar, Anil Ambani-controlled Reliance Communications has also indicated its interest in the Hutch Essar asset.





Essar, the joint venture partner in Hutch Essar, is also in the running to up its stake, it is believed.





So far, Hutch is learnt to have found offers made by potential bidders (Vodafone, Essar and Maxis) lower than its expectations.





Vodafone is expected to up its stake soon. It could perhaps be along with Verizon, if the industry buzz is to be believed.





Meanwhile, Japan’s DoCoMo, which recently tied up with Hutch for a value-added service in India, is also learnt to have shown some interest.





Sources in the know of things told DNA Money that within two weeks, a winner could be known.





Hutch is expected to announce its intentions of selling the Indian telecom business soon enough. But so far, Hutch has only said that it has been approached by potential buyers!



Source : DNA

 

vengabeats

Par 100 posts (V.I.P)
Vodafone gets caveat emptor call

LONDON: Vodafone has been advised to abandon its desire to buy into Hutchison Essar after the Hinduja brothers entered the bidding war.

State Street, which holds 1.7% of Vodafone, has said that the world’s largest mobile company risks overpaying in the current overheated situation with so many suitors, all bidding for India’s fourth-biggest mobile operator.

According to State Street, Vodafone had made a similar mistake with the 3G licence sale and feels they should not repeat the mistake.

“The key is that Vodafone must meet the acquisition criteria it has set, if it looks as though they might be breached, then it must be prepared to walk away,” said Mark Webster, senior investment manager at State Street.

Vodafone recently laid down strict acquisition rules which aimed at ensuring transactions yield a return above the cost of capital within three-five years.

These were introduced by chief executive Arun Sarin in response to criticism about the company’s performance under his management.

While Vodafone has not made any comments about its pursuit of Hutchison Essar except for a statement on December 22 saying that it was considering acquiring controlling interest in Hutchison Essar because the Indian market has a great potential, media speculation and strong interest have pushed its possible bid to $18 billion.

Sir John Bond, Vodafone’s new chairman, had reportedly sent “strong communications” in support of the group’s Indian ambitions.

However, as the bidding war has intensified with more and more companies joining the battle, some investors have become concerned about the risk of overpaying. Vodafone is expected to offer cash if it is successful.

“At the higher price levels we are looking at now, it looks risky. If Vodafone is going to be asked for too much, then it has to be prepared to walk away,” a market analyst said.

Vodafone has still got to explain to its shareholders how a bid for Hutchison Essar will fit the criteria it has set.

Source : DNA

 

love_gundu22

MP Guru
Reliance Comm has $17bln Hutch Essar pledges - paper

Reliance Comm has $17bln Hutch Essar pledges - paper

January 6, 2007

MUMBAI (Reuters) - Reliance Communications Ltd. has received commitments of $2 billion from private equity firms for a bid for Indian mobile operator Hutchison Essar, and $15 billion from banks, a newspaper said on Saturday.

In return, the four private equity firms were seeking 10-12 percent of Hutchison Essar in the event that Reliance Communications, India's second-largest mobile phone carrier, made a successful offer, the Business Standard newspaper said.

Sources said last week private equity firms Kohlberg Kravis Roberts, Blackstone and Carlyle were interested in Hutchison Essar and Reliance Communications chairman Anil Ambani has said he has the backing of global financial institutions for a bid.

Newspapers said Apax made a fourth in the private equity companies prepared to partner Reliance Communications.

"RCL has commitments from banks for providing the remaining $15 billion," the Business Standard newspaper said, citing sources close to the development.

Separately, the Economic Times said the four private equity firms could jointly contribute $2.5-3 billion to a possible bid, although it was not clear if they had committed that amount.

The paper also said Reliance Communications may offer the four 15 percent in Hutchison Essar and had lined up more than $12 billion in bank funding.

A Reliance Communications spokesman declined comment. The firm, which has declared its interest but not yet made any offer public, holds a board meeting on Jan. 10 to decide on fund raising.

Britain's Vodafone Group Plc and India's Hinduja group, which runs Hinduja TMT and bus and truck maker Ashok Leyland, have both expressed interest in Hutchison Essar, in a deal estimated at $17-20 billion.

The Business Standard said Reliance Communications had not yet committed to any of the private equity firms and was also in talks with billionaire financier George Soros, Warburg Pincus, Texas Pacific Group and Singapore's Temasek. It was expected to make a bid after Jan. 14.

DIFFERENCES

Hutchison Essar, India's fourth-largest mobile carrier, is 67-percent owned by Hong Kong-based Hutchison Telecommunications International Ltd. and 33 percent controlled by India's Essar group.

Essar, which is controlled by the Ruia family, is reported to be interested in buying the rest of the joint venture and has a right of first refusal should Hutchison decide to sell.

However the two are reported to differ over interpretation of the refusal rights and a source familiar with the situation told Reuters on Friday these would come into play only if Hutchison opted to sell to one of three local rivals -- Reliance Communications, Bharti Airtel and the Tata group.

The Hinduja group, which has said it is interested in a controlling stake, was not included among the buyers over which Essar would have pre-emption rights, the source said.

Essar says however that this is Hutchison's interpretation and it has the first right of refusal.

Newspapers also said the joint venture partners would meet in Hong Kong next week to try to iron out their differences, although a source close to Essar told Reuters the two were talking constantly.

Hutchison Essar has been the subject of takeover interest since plans for an initial public offering were scrapped over disagreements between the two partners and Hutchison has said it has received proposals but not given any details.

The Indian mobile carrier has 22.3 million customers and a 15.6 percent share in India's mobile phone market, the fastest growing major cell phone market in the world.

The government expects 180 million mobile users by the end of 2007, compared with about 143 million now.
:tea:
 

vengabeats

Par 100 posts (V.I.P)
Hutch, Essar in a sell jam

MUMBAI: The fight between Hutchison Whampoa and the Essar group over the latter’s rights in the Indian joint venture has taken an unexpected - and potentially awkward - turn for the Ruia-promoted group. Hutchison and Essar, ET has learnt, did not sign any shareholders’ agreement for running Hutchison Essar, India’s fourth-largest wireless operator. They ran the JV on the basis of a term sheet signed in July 2003. That term sheet, a copy of which is with ET, contains the rights of both the partners and clauses on board membership and dispute resolution mechanisms.

But it also contains four conditions which have to be fulfilled for the rights to become effective and legally binding. They include approvals from shareholders, lenders, regulators and the government and the execution of all relevant documentation including the shareholders’ agreement. All the other conditions were fulfilled except for the last one. The two parties could not agree upon a legal contract and gave up the attempt, preferring to run the company on the basis of a term sheet.

This disclosure adds a bizarre twist to the tug-of-war between Hong Kong billionaire Li Ka-shing and the Ruia brothers. And it could have huge implications for Essar, Hutchison and all the potential bidders. After all, a term sheet is only a statement of intent. It is not a legally binding contract. A shareholders’ agreement, on the other hand, defines the rights, gives them a legal backing and framework and provides a basis for all future transactions between the parties.

This leaves a number of unanswered questions. What happens in the absence of a shareholders’ agreement?

Can Hutchison sell its 67% to Vodafone or any other foreign private equity consortium without offering it first to Essar? Can Essar still claim to enjoy certain rights? Where does this leave RCL? If the conditions precedent to the agreement have not been met, can Essar still demand that its rights, atleast in the respect of the Indian bidders, be recognised?

Some legal experts believe that in the absence of a legal contract, Essar’s case is weak. The chances of the UK-based giant Vodafone, the Hindujas and a consortium of private equity firms appear to brighten considerably. Essar itself does not think so. It believes its case to be sound. An Essar group spokesperson declined to respond to a questionnaire on the issue but senior group officials pointed to Hutch’s own admission to sections of the international media that Essar’s rights are restricted only to the Indian bidders. This means the term sheet, which contains this right, is legally valid, they add.
The Ruia gamplan is clear. They wish to take full control of the company and have already tied up with some banks for the money. They want to buy Hutch’s 67% stake at a fair valuation and not at stratospheric valuations in the range of $20-21 billion. To achieve this, they are insisting that the term sheet and the rights are still valid.

On the other hand, Hutch, by claiming that the term sheet is not a legally binding document, hopes to kill two birds with one stone: first, it can command a better price for its 67% if it has the freedom to sell it to the best bidder. Two, given the past hostility between the two partners in the JV, Hutchison is reportedly not very comfortable in selling its stake to Essar.

Hutch’s thinking, say people familiar with the situation, is that Essar does not enjoy any right of first refusal in the case of an overseas buyer. They point out that the failure to close a shareholders’ agreement means that conditions precedent to completion of the transaction have not been met. As per a clause in the term sheet, its validity is only till December 2004 when Hutch Essar is supposed to do an IPO. That has not happened and the date has long since passed. Hutch believes that the passing of the date spells the end of the validity.

But there is still little ambiguity about one point. Given the history of hostility between the two, Hutch would much rather prefer a sale to a Vodafone, an overseas private equity consortium or the Hinduja group. The history apart, Hutch officials are incensed over what they see are the Ruia group’s attempts to interpret the right of first refusal in a way convenient to them.

The ROFR in the term sheet is spelt out in such a way that it gets triggered only if Hutch’s stake in Hutch Essar falls below 40% ‘AND’ the sale is to a consortium where any of the three Indian companies, Reliance, Tata and the Bharti group own more than 10%. Essar is of the view that the rights get triggered even if one scenario applies - that is, if Hutch’s stake in Hutch-Essar falls below 40% ‘OR’ the sale is to a consortium where any of the three Indian companies own more than 10%.

In this slugfest, the Anil Ambani-controlled RCL is believed to be toying with the idea of holding less than a direct 10% stake, while the consortium of private equity investors and other Indian partners hold the rest. When contacted, a senior source in ADAG said all options are open for consideration. However, if Hutch feels its stand may lead to a long, protracted legal tussle, it may consider selling to Essar at the right price.

The Essar case is also hampered by the fact that Hutch-Essar’s articles of association do not reflect the group’s first right. This would make it difficult for them to sue the company and get a ruling. As things stand, Essar can at best sue Hutch for a breach of promise, assuming the sale of the 67% happens without Essar. A breach of contractual obligations would be difficult to prove, feel legal experts.


Source : ET
 

vengabeats

Par 100 posts (V.I.P)
Vodafone open to partner Reliance too

New Delhi: After expressing its willingness to partner Ruias-promoted Essar on Wednesday, British telecom giant Vodafone on Thursday kept its option open to partner Reliance Communication to rope in India's fourth largest mobile player Hutch-Essar.


Keeping all its options open, including partnering some of the other key suitors, as quoted by PTI, Vodafone CEO Arun Sarin said, "We are a partnership kind of people, we are open to everything."


He said this against a specific question on whether the company was open to partnering Anil Ambani Group company Reliance Communications (RCOM) in its bid for Hutch-Essar Ltd (HEL).


Sarin said Vodafone, which started studying the books of its takeover target early this week, would complete the exercise in a couple of weeks and a formal bid could be submitted in the next few weeks.


Coinciding with Sarin's visit, Essar Group Chairman Shashi Ruia was in the national capital on Wednesday.


Both Ruia and Sarin had separately called on Finance Minister P Chidambaram and Communications Minister Dayanidhi Maran.


On the other hand, Reliance Communications has also started due diligence of Hutch-Essar.


RCOM Chairman Anil Ambani, who was on Wednesday authorised by the company's Board to take all necessary steps to pursue HEL, is in the national capital in this connection.


However, it was not clear if at all Sarin and Ambani would meet.



Source >IBN
 
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