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UK-based mobile phone giant Vodafone has bought its India Joint Venture partner, Essar Group’s 33 percent stake in Vodafone Essar Limited (VEL) for $5.5 billion, ending its four year troubled relationship.
Vodafone will now hold a majority of 74 percent shareholding in the venture. The deal is subject to regulatory approval and the balance 26 percent is held by Indian shareholders.
The Mumbai office of AZB & Partners advised Essar with a team led by Partner Shameek Chaudhuri along with Associate Ashni Roy.
Herbert Smith advised Essar on the international aspects of the transaction with a team led by London Partners Clive Barnard and Greg Mulley.
The Delhi office of S&R Associates advised Vodafone on Indian aspects of the transaction with a team led by Partners Rajat Sethi, Niti Dixit and Uday Walia alongwith Associates Tanya Aggarwal, Sarah Rufus, Simran Dhir, Dhruv Nath and Raunaq B. Mathur.
The London office of Slaughter and May advised Vodafone with a team led by Partners Craig Cleaver, Sarah Lee, Sarah Paterson and Roland Turnill.
The Mauritius office of Conyers Dill & Pearman advised on the Mauritius corporate, regulatory and security law issues pertaining to the acquisition
The buyout is structured as two payments, one for $4.2 billion for the 22 percent stake in Essar Communications (Mauritius) Limited (ECML) and the second for $1.3 billion for 11 percent stake in ETHL Communications Holdings Limited (ECHL).
According to Telegraph, the $5.5 billion price includes $880 million payment for Indian taxes, which has been withheld and will be returned to Essar once finalised.
According to the press release, the settlement marks the end of a four-year partnership between Vodafone and Essar in India, during which VEL has grown to reach almost 140 million subscribers.
Vodafone and Essar initially went into business together in 2007, when Vodafone purchased a 67 percent stake in Hutchison Whampoa’s Indian telecoms business, in which Essar already had a stake. The deal allowed Vodafone to enter the Indian market for the first time.
However, Vodafone and Essar clashed repeatedly, with Essar claiming Vodafone was trying to force them out of the joint venture and Vodafone criticising Essar’s plans to restructure its telecoms business.
According to media report, VEL controls 24 percent of the total market and ranks as the second largest operator in the country behind Bharti Airtel, which controls 28 percent.