Dec 21, 2006

Vodafone plans $13 bn move for India group

The board of Britain's Vodafone Group Plc is set to meet on Thursday to consider a proposed $13.5 billion-plus offer for India's Hutchison Essar. Such a move would likely to trigger a bidding war with Reliance Communications Ltd, India's second-biggest mobile services firm and which is controlled by the Anil Ambani group, Thursday's edition of the newspaper said.
A Vodafone spokesman declined to comment. Indian newspapers reported on Wednesday that Vodafone was exploring options for a bid for Hutchison Essar to expand in the world's fastest growing cellular services market

This could include selling its stake in top mobile services firm Bharti Airtel Ltd.A bid of $13.5-$14 billion could value Hutchison Essar at a 24 per cent premium to Bharti, which has a market capitalisation of $25.7 billion, CLSA said in a client note.

Hutchison is the fourth-largest wireless operator in India with a 16 per cent market share, behind Bharti's 21.5 per cent, Reliance's 20.4 per cent and state-run Bharat Sanchar Nigam's 16.5 per cent.

The FT said Vodafone executives were to decide whether to pursue what would be the largest offer to buy an Indian firm, and planned to offer a bid to Canning Fok, managing director of Hutchison Whampoa, and Ravi Ruia, vice-chairman of Essar, in London on Friday.

A person close to Reliance Communications, which the FT said had joined forces with private equity houses including Blackstone to consider an offer for Hutchison's stake, was quoted as saying the company was monitoring developments, but had not yet decided to make a formal bid.

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