Anil offers HTIL boss stake to win Hutch-Essar control
In its battle with Egypt’s Orascom and Malaysia’s Maxis Communications to wrest control of Hutchison Essar, Reliance Anil Dhirubhai Ambani Group is believed to have offered Hutchison Telecommunications’ Hong Kong-based Chinese owner Li Ka-Shing a stake in Reliance Communications Ltd (RCL)—India’s second largest mobile operator.
Li Ka-Shing is the promoter of Hutchison Whampoa, the parent company of Hutchison Telecommunication International Ltd (HTIL), which owns 52% in Hutch-Essar.
To sweeten its offer, R-ADAG is believed to have offered a deal comprising cash and RCL shares. Neither side confirmed the development.
Hutch-Essar has been valued at around $13-14 billion and RCL has tied up with private equity firms Blackstone, Texas Pacific Group, KKR and Carlyle to table a an $8-billion bid for the 52% stake.
It is also understood to be negotiating to retain Hutch-Essar’s current managing director Asim Ghosh if it gains control of the firm. Ghosh is one of the most prominent professional telecom CEOs in the country. Ghosh has a personal stake of 12% in Hutch-Essar.
The key to gaining control of Hutch-Essar is held by the Ruia family-owned Essar group, which owns 33% equity in the company. The Ruias are believed to be open to exiting the venture for a good valuation.
The Bait
• Li Ka-Shing is the promoter of Hutchison Whampoa, the parent company of HTIL
• R-ADAG is believed to have offered a deal comprising cash and RCL shares
• RCL is said to be in talks to
retain Hutch-Essar’s current MD Asim Ghosh
The group has appointed Morgan Stanley as its adviser. Essar group executives said they would not comment on speculation.
With 22 million subscribers, Hutch-Essar is crucial to Reliance’s efforts to topple Bharti from the top slot in the domestic telecom market. If it succeeds, the number of RCL subscribers will cross 52 million against Bharti’s 30 million.
Also keen on Hutch-Essar is Maxis, which has 74% in Aircel. Having Hutch-Essar in its kitty will push Maxis to the third position with 26 million subscribers. Maxis is believed to have engaged Standard Chartered as its adviser.
On Friday, RCL shares closed on the Bombay Stock Exchange at Rs 466.65, up 4.31%. The company’s market cap also shot to Rs 95,412 crore.
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