Vodafone wins race for India's Hutchison Essar

Britain's Vodafone beats rivals to acquire Hutchinson Essar, now valued ad $19 billion.

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By  Reuters Published  February 11, 2007

Britain's Vodafone Group Plc has won the battle for a controlling stake in Hutchison Essar with a bid that values India's fourth-biggest mobile firm at around $19 billion, including debt.

India's Essar Group, which owns 33 percent of Hutch Essar and had also been bidding for the 67 percent being sold by Hutchison Telecommunications International Ltd, confirmed the deal on Sunday.

Qatar Telecom and India's Hinuja Group, as ArabianBusines.com revealed yesterday, had also submitted a joint bid.

A source close to the matter earlier told Reuters that Vodafone had won the bid battle for the 67 percent stake, defeating India's Reliance Communications and Hinduja group, as well as Essar.

Vodafone declined to comment and Hutchison was not immediately available for comment.

The deal is a critical move by Vodafone Chief Executive Arun Sarin, who is under pressure amid slowing growth in Vodafone's core European markets to expand the business while at the same time not overpay for acquisitions.

India is the world's fastest-growing major mobile phone market and Hutchison Essar has a market share of 16 percent.
Vodafone currently has a 10 percent stake in India's number one player Bharti Airtel Ltd. but Bharti Chairman Sunil Bharti Mittal had said it was not keen to sell a further stake to the British group.
The deal for Hutch Essar could see Vodafone selling its stake in Bharti, as it could have a controlling stake in Bharti's rival.

Foreign investors are limited to owning 74 percent of an Indian mobile operator, and so Vodafone will have to seek a local partner for Hutch Essar.

"We have been offered by Vodafone to be their partner," the Essar group said in its statement. "We are at the moment evaluating all our options in the best interest of the group."
Hutchison Telecom is a unit of the Hutchison Whampoa Ltd. conglomerate controlled by Hong Kong billionaire Li Ka-shing.

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