British telecom giant Vodafone's board of directors is meeting on Thursday to consider a takeover bid of more than $13.5 billion for India's fourth-largest mobile operator Hutchison Essar, media reports said in London.
"Vodafone's board is set to meet on Thursday to consider a proposed $13.5 billion-plus offer for Hutchison Essar," a report in Financial Times said. "Vodafone executives plan to table an offer in person on Friday to Canning Fok, managing director of Hutchison Whampoa and Ravi Ruia, vice-chairman of Essar, who are both scheduled to be in London," it said.
The bid from Vodafone, world's largest mobile operator in terms of revenue, would probably trigger a counter attack from Reliance Communications. As the second biggest private operator in India, the Anil Ambani group firm would be able to exploit big synergies with Hutchison, the UK papers said.
Vodafone and Reliance are serious about Hutch Essar, and there may be plenty of others to come, the FT report said, quoting an unnamed banker familiar to the situation.
However, Sunil Mittal, chairman of Bharti Enterprises and founder of Bharti Airtel, the market leader in India, has refused an invitation from Vodafone to undertake a joint bid for Hutchison Essar, the newspaper said.
Bankers told Financial Times that Mittal feared losing control of the main cash-cow of his rapidly diversifying group.
The group, which generates most of its revenues from telecom services, has diversified other areas such as retail.
RCL was monitoring developments but had not decided to make a formal bid, reports said. It is believed to have teamed up with four equity houses, including Blackstone.
However, some reports said RCL and Blackstone have asked Citigroup and UBS to raise $15 billion to fund their bid.
Although it was not certain that Vodafone board will decide to make a bid for Hutch Essar, the British giant has made clear that it was looking for new acquisitions and boost slowing growth in its European businesses by buying assets in emerging markets, a report in The Times said.
The Independent also reported that Essar is preparing a bid to buy out its joint venture partner, while the Egyptian operator Orascom and Malaysia's Maxis could also move for Hutchison Essar.
India is the world's fastest growing wireless market with more than six million users signing up every month. Foreign ownership restrictions in India prevent Vodafone from directly holding more than 74 per cent of Hutch Essar.
This means it may have to list a minority stake or find an Indian partner for the remaining 26 per cent. If successful with Hutchison Essar, Vodafone would almost certainly be required to sell its 10 per cent stake in Bharti Airtel, the reports said.
Hutchison Essar is 67 per cent owned by Hutchison Telecom International Ltd and 33 per cent by Essar, a diversified conglomerate controlled by the Ruia family with interests in shipping, steel, oil and power sectors.
Essar, which has certain pre-emption rights over the Hutchison stake, would probably block any attempt by Vodafone to acquire just the 67 per cent stake owned by the Hong Kong-based group, the media reports said.
