Vodafone Group is contemplating to consider a $13.5 billion offer for Hutchison Essar, India’s fourth largest mobile phone operator. However, they have not reached to any decision yet over the issue. According to reports, Vodafone executives are likely to make an offer to Canning Fok, managing director of Hutchison Whampoa and Ravi Ruia, vice chairman of Essar at this weekend. If the offer is made, this would mark the largest offer ever made to an Indian firm.
The world’s biggest mobile phone operator, Vodafone, has already made its intention clear for new acquisition and its objective to boost slowing growth in its European business by acquiring assets in emerging markets. Despite of this fact, it is not certain that the company will bid for the Indian firm.
The prospective takeover will not be easy for Vodafone, even if it moves ahead with the offer it will not be able to buy more than 74 percent of the operator owing to foreign-ownership restrictions. Further, if it acquires Hutchinson the company would be forced to sell its existing 10 percent stake in Bharti Telecom of India. However, Vodafone has already been involved in selling its stakes in Switzerland, Belgium and Japan last year.
Moreover, according to speculations Vodafone is not certain to make a bid for Essar. In this situation, it is not clear whether the Essar group would prove to be a ready partner and it may insist that its stake was sold too. Hutchison Essar is 67 percent owned by Hutchison Telecom International and 33 percent by Essar.
In the meanwhile report suggests that the company is likely to face competition from Reliance Communications as it is gearing itself to make an offer. Reliance Communications is already in talks with a private equity group Blackstone Group to consider an offer for Hutchison’s stake.
