INDIA BUSINESS WORLD - JUNE 2006
THE MONTH THAT WAS...

BIRLAS PAY RS 4,406 CR FOR TATA'S IDEA STAKE

  THE TRANSACTION between the Birlas and Tatas for the 48% held by the Tatas in Idea Cellular has been completed and the money (Rs 4,406 crore) has been deposited in an escrow account. This amount would be transferred to the Tata Group once the transaction is cleared by the DoT, industry sources said.

15% has been picked picked up by the listed entity, Aditya Birla Nuvo and the balance 33% may have been bought by Birla TMT Holdings, an unlisted investment company of the Aditya Birla group.

The Birlas may now place the 33% with financial investors at a price of around Rs 45 per share, said industry sources. This would enable the Birlas to make a profit of about Rs 5 per share since they have acquired the shares from the Tatas at a price of Rs 40.50 per share.

However, sources close to the Birlas strongly denied that they would place the shares at a higher price. ``We have earlier stated that the shares will be placed at the same price as the transaction with the Tatas,'' they said. A number of banks and finacial institutions, including the private equity arm of Citigroup and IDFC, are believed to have put in bids for part of the 33% stake.

Veteran investment banker Nimesh Kampani is said to be handling the possible sale to financial investors, one industry source said. However this could not be confirmed.

The Birlas had agreed to buy out the Tata stake in a Rs 4,406 crore (Rs 40.50 a share) deal in April this year, valuing the company at about Rs 12,000 crore. With the transaction now virtually complete, the Birla stake in Idea Cellular has touched 98% from the earlier 50.14%.

The transaction has brought down the curtain on the joint venture between the Tatas and Birlas that ended in a rather acrimonious war of letters between the two earlier this year.