Though i am not much into reading business news but one thing which i am following from the past few days is bidding war for hutchison essar. This has all the components of a financial thriller.
First there were rumours that R-Comm was interested in buying Hutchison Telecom's share in hutch essar. (Hutchison Telecom is owned by owned by hong kong conglomerate Hutchison whampoa headed by hyperbillionare Li Ka-shing). It was thought that by giving rise to such speculations thereby increasing the valuation, R-com plans to remove unnecessary players from the scene . But this strategy backfired when the world's largest telecom major, vodafone also showed its interest in buying out the stake. Two years bacak vodafone unsuccessfully tried a bid for AT&T and recently it has been in some quagmires. So this time it seems to be extra cautious. Also if succesful this time then it will help Arun Sarin, CEO vodafone, to regain some of his dwindlimg credibility.
In between all this hoopla, The Ruias who own 33% stake in Hutcisson Essar thought that why sell such a potential money spinner. Instead why not buy out the whole company. So they have also started chalking out their separate plans.
Hutchisson Telecom is taking the services of Goldman Sachs to advise it.
While Anil Dhirubhai Ambani Group(ADAG) on the other hand is depending on its SPV(Specaial purpose Vehicle) fromed with Cralyle and Blackstone, as current rules don't allow it to own over 10% or less than 100% in a competing circles on its own. Vodafone is in talks with Texas Pacific Group(TPG) to raise funds for its bid. Vodafone will have to look for a indian partner to own more than 74% stake in an indain telecom venture. Ruias have roped in Bearn Stearns to raise funds and Euromax capital is advising them. Also Maxis Communication of Malaysia has shown its interest in the bid.
Goldman Sachs has initailly valued Hutchisson Essar's value at $ 18 billion according to witch hutchsioon's 66% stake comes to a value of 12 billion. But the next day news comes that hutchisson wants $14 billion+ for its stake in the company which takes the value of combined entity to $21 billion.
Now with vodafone formally bidding $ 18 billion for the combined entity (which means $12 billion for hutchison's stake) and ADAG also entering the race formally the field is all set for what could be the ultimate cliffhanger. But for the time being lets wait and watch!
updates:- Nothing much seems to happening..
- Hinduja brothers have also shown interest..Orascom is also gainin ground.
- Arun sarin of Vodafone is still keeping his cards close to his chest.
- Realiance is also yet to make a bid.
- In between all this brouhaha many top-most managemnt gurus have warned the buyers of inflated valuations of hutch.
- finally....at last...vodafone gets Hutch...hope turns out to be a good venture for Vodafone nd for Mr. Sarin
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2 comments:
Dont you feel Hutch is getting avaricious day by day with many ppl running to win the race...
praveen..its true that hutchison is getting rapacious with increasing number of potential buyers but then its the rule of demand and supply.
the more the number of buyers the better it is for the seller.
I don't think there is anything wrong in making the best use of such a situtaion and increasing your profits.
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