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INDIA
BUSINESS WORLD -
OCTOBER 2005
THE MONTH THAT WAS
ESSAR BUYS MAX'S
3.16% IN HUTCH FOR RS 657 CRORE
Essar Teleholdings
today signed an agreement with Max Telecom Ventures to acquire
the latter's 3.16% stake in Hutchison Essar for Rs 657 crore.
The all cash deal is prised at Rs 607 per share. Remarkably,
Max has made more money by selling its 3.16% stake than when
it sold a 41% stake over seven years ago. In April 1998, Max
India had sold its 41% equity in the Mumbai circle to Hutchison
for Rs 561 crore.
As per today's
deal, the valuation of Hutchison Essar works out to over $
4.5 billion. With this acquisition, the Essar Group's stake
in Hutchison Essar will increase from 30.42% to 33.58%.
"This acquisition is part of our decision to enhance
our stake in the consolidated entity and also reflects the
strong relationship between Essar and Hutch," Essar Teleholdings
CEO Vikash Saraf said.
In the past, Essar
Tele has been in talks with the Hindujas too and is eventually
expected to buy out their stake. Essar had acquired the 3.43%
stake of Usha Martin Telematics' in June for Rs 267 crore.
Following the exit of Max, the Hutch Essar shareholders now
include the Hindujacontrolled Indusind Telecom Network with
a 5.11% stake, Kotak Mahindra with a 19.31% stake and Hutchison
Telecommunications International (HTIL) with a 42% stake besides
the Essar Group's 33.58% stake.
Today's sale marks
the exit of Max from the joint venture, initially called Hutchison
Max Telecom. Even after the April 1998 deal, Max India had
continued to have a 10% stake in HMTL, which on consolidation
with other companies acquired by Hutchison had been reduced
just over 3%. In 1998, the Hutchison Max entity had been valued
at around Rs 1,400 crore. Max India had paid about Rs 50 crore
in 1995 to acquire the cellular licence for Mumbai.
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