Indian multinational conglomerate the Essar Group has exercised an option to sell a 33% stake in mobile network operator Voadfone Essar, its joint venture with UK mobile giant Vodafone Group. According to Bloomberg, Essar has exercised its put option over 22% of the JV, while Vodafone has in turn exercised its own call option to buy the Indian company’s remaining 11% holding.
It is understood that the two major shareholders in the mobile operator have sought to find a compromise on the valuation of Vodafone Essar, and under the terms of the agreement between the two Vodafone Group will pay USD5 billion in cash for Essar Group’s stake, which will boost the British company’s holding in Vodafone Essar to around 75%. The deal is expected to close by November 2011 at the latest.
As noted in TeleGeography’s GlobalComms Database, in May 2007 Newbury-based Vodafone Group bought majority control of Vodafone Essar (formerly Hutchison Essar) from Hong Kong’s HTIL for GBP5.5 billion (USD11 billion), excluding GBP1.2 billion of assumed net debt and GBP2.4 billion representing call options to increase the UK group’s equity interest in the Indian cellco from 52% to 67%. It has since boosted its holding in the cellco via a number of smaller transactions, including the acquisition of 49% of the holdings of Analjit Singh, who held a 7.58% stake in Vodafone Essar through three separate holding companies, and Asim Ghosh, who had a 4.68% interest in the cellco, again held through three companies, in December 2009.