Essar Settles With Hutch, Vodafone
The Essar Group, which had put in a bid to acquire HTIL's stake itself, maintained that it had first refusal rights on the sale and sought management control of the carrier.
But according to a statement from Hutchison Telecom International, Essar will "refrain from initiating any action that may inhibit or delay the completion... and waive any rights it may have in relation to the transaction." HTIL's board approved the sale on March 9. (See Hutch Essar Sale Approved.)
HTIL will pay Essar $373.5 million on the close of the Vodafone deal, which is expected to be completed in the next two weeks, and an additional $41.5 million plus interest, dependent on certain conditions, within two years.
With Essar's objections apparently resolved, Vodafone today announced a partnership agreement with the company on control of Hutchison Essar. (See Vodafone, Essar Agree Terms.)
Under the agreement, Vodafone will take operational control of the operator, which will be renamed Vodafone Essar, and the Essar Group will retain its 33 percent stake. Ravi Ruia, vice chairman of Essar, will be appointed chairman of Vodafone Essar and Vodafone CEO Arun Sarin will serve as vice chairman.
Essar Group will have the right to sell its stake to Vodafone for $5 billion "between the third and fourth anniversaries of completion" of the acquisition -- in 2010 and 2011 -- or to sell between $1 billion and $5 billion in Vodafone Essar shares to Vodafone at a fair market value.
Vodafone shares closed up 3 pence (2.24%) at 137 pence on the London Stock Exchange .
— Nicole Willing, Reporter, Light Reading