Jan 1, 2007

Vodafone's hiked bid values HEL over $20 bn

The bidding war for the country’s fourth largest mobile phone company Hutch-Essar (HEL) has gained momentum with leading contender Vodafone slated to make a fresh bid this week. According to sources, the UK telecom major has assigned a value of over $20 billion for the entire company. At this valuation, Hong-Kong based Hutchison Whampoa’s 67% stake in HEL is pegged at about $14 billion. In addition, Vodafone is also expected to incur an extra cost of about $2 billion for control of the company.
Vodafone, the world’s largest cellphone firm, is believed to have earlier valued the Hutch at $17-18 billion. Sources confirmed that Vodafone was likely to table its fresh bid for the 67% stake this week through its advisor. When contacted, the Vodafone spokesperson Bobby Leach told ET: “I’m afraid this is all speculation and we have no comment to make.”

Hutchison Whampoa, owned by Hong-Kong tycoon Li Ka-shing, holds 67% stake in HEL, with the Ruias of the Essar group holding the remaining 33%. As reported by ET, the Ruias, last week had offered to buy Hutchison Group’s 67% stake for $11 billion, at an estimated enterprise value of about $17-18 billion for the company. The offer was made through the group’s advisors Morgan Stanley and Bear Stearns.

Last week, Reliance Communications (RCOM) chairman Anil Ambani moved the battle to the next level by officially confirming his RCOM’s interest in acquiring HEL.

Vodafone’s move to join the war for Hutch Essar, and in the process sellout its 10% stake in Bharti Airtel, is in line with its global exit strategy. Vodaone’s recent history reveals that the telecom behemoth has exit markets, where it did not command a leadership position. And, it has been shedding stake in operators, where all doors to pick up controlling stake remained closed.

Source : Economics times

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