UK-based telecom giant Vodafone has made the winning bid for the 67% stake in Hutchison Essar (HEL) at an EV of $19.3 bn (Rs. 86,000 crores). This is the largest acquisition in India. Videocon has approached Essar to remain invested in Hutch with its 33% stake as the Indian partner.
Vodafone has also made similar offers to Analjit Singh and Asim Ghosh, the other existing shareholders and retain their combined stake of 12.26%. Vodafone has paid a price of around $794 per subscriber to clinch the deal. The valuation is in line with the $33 bn market capitalization of Bharti Airtel, the country’s largest private mobile services operator, and the $22 bn market capitalization of Reliance Communications, the second largest operator.
The acquisition will give Vodafone, which has over 200 mn subscribers globally, a strong presence in the fastest growing market for mobile services: Hutchison Essar has close to 24 mn customers.
In a related development, Vodafone has sold its 5.6% direct stake in Bharti Airtel to promoter Sunil Mittal for $1.6 bn. The deal was on a deferred payment basis. Vodafone will continue to hold an indirect 4.4% stake in the company, as a financial investor and will not have any representation on Bharti Airtel's board nor any management rights.
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