News: Big buzz on $8 billion bid for Hutch-Essar
(DNA 07/12/2006) Mumbai/New Delhi - Will arch rivals Ambanis and Ruias break bread in the same boardroom? If Thursday’s buzz is anything to go by, they may.
Shrewd Hong Kong entrepreneur Li Ka-shing’s firm Hutchison Telecommunications International Ltd, is fighting a shadow battle with his Indian partner the Essar group.
Hutchison has been approached by Blackstone group LP and Texas Pacific group for buying its local telecom assets, the Wall Street Journal said on Thursday.
And partnering the bulge-bracket US-based private equity pashas could well be the ambitious Anil Ambani.
His Reliance Communications is toying with a plan to enter GSM mobile telephony as it is more lucrative than the CDMA technology platform the company operates in.
Li Ka-Shing, who is currently battling for ownership with his son Richard Li to acquire PCCW, the basic telephony business in Hong Kong, has too much in his plate already.
While both sides have declined to comment on the speculation, the Wall Street Journal said Blackstone Group LP and Texas Pacific Group may make as much as an $8 billion offer for Hutchison Essar Ltd.
Blackstone might ally with Reliance Communications Ltd, said the report.
It makes eminent sense for Reliance to buy into Hutch as it gives it the numbers in GSM telephony, which otherwise it could enter only through a greenfield venture.
It has already earmarked a capital expenditure of Rs 36,000 crore for its proposed GSM venture. As first reported by DNA Money on November 9, Reliance is floating a tender for 75 million GSM lines.
It is already in a spat with CDMA technology proprietor Qualcomm Inc over royalty fees.
“We haven’t approached anyone nor has anyone approached us,” sources in Reliance Communication told DNA Money. A Hutch-Essar spokesperson said “It’s not the company’s policy to comment on speculation.”
But the confluence of factors surrounding the troubled alliance reveal that the rumours may have some credibility. It could be posturing by the Hong Kong billionaire who’s finding his Indian partner too difficult to manage.
The Ruias have held up the merger of BPL’s Mumbai operations for a higher stake in Hutch-Essar. This could be Li Ka-shing’s turn to return the compliment, analysts said.
Industry sources said talks were held at the promoters’ level, but the seriousness of these could not be ascertained.
Hutch-Essar’s valuation is estimated at around $12 billion.
But a source pointed out that the valuation would be around 20%, if at all the sale happens. An industry insider said, “there are people in play”, referring to sale possibilities.
Recently, Egypt-based Orascom Telecom had triggered speculation that HTIL was up for sale.
Orascom, which had picked up 19.3% stake in Hutchison Telecom for $1.3 billion last December, wanted to increase its holding considerably in the company.
But subsequently, Orascom changed its stand. At that point, a top industry source had said Hutch did not have any plans to sell.
In another development, a senior executive of HTIL had recently said that Hutch-Essar IPO (initial public offering) was not scheduled for any time soon.
As reported earlier, Hutch-Essar was gearing up for an IPO, but the plans were shelved somewhere along the way, perhaps over differences between the JV partners in India. Besides its IPO plans going awry, even the proposed merger of Hutch Essar with BPL Mobile in Mumbai has been thrown off gear.
Will the Hong Kong billionaire sell out, or is it a ploy to get the Ruias to come around, the coming months will tell.
Possibilities & reasons…
A Blackstone-ADAG combined acquisition offers Anil Ambani a ready and profitable GSM operation. It also gives Li Ka-shing, the promoter of Hutchison Telecom, Hong Kong, an opportunity to hit back at Essar.
Essar’s Ruias have held up the merger of BPL’s Mumbai operations, its most profitable, for a higher stake in Hutch-Essar
Shrewd Hong Kong entrepreneur Li Ka-shing’s firm Hutchison Telecommunications International Ltd, is fighting a shadow battle with his Indian partner the Essar group.
Hutchison has been approached by Blackstone group LP and Texas Pacific group for buying its local telecom assets, the Wall Street Journal said on Thursday.
And partnering the bulge-bracket US-based private equity pashas could well be the ambitious Anil Ambani.
His Reliance Communications is toying with a plan to enter GSM mobile telephony as it is more lucrative than the CDMA technology platform the company operates in.
Li Ka-Shing, who is currently battling for ownership with his son Richard Li to acquire PCCW, the basic telephony business in Hong Kong, has too much in his plate already.
While both sides have declined to comment on the speculation, the Wall Street Journal said Blackstone Group LP and Texas Pacific Group may make as much as an $8 billion offer for Hutchison Essar Ltd.
Blackstone might ally with Reliance Communications Ltd, said the report.
It makes eminent sense for Reliance to buy into Hutch as it gives it the numbers in GSM telephony, which otherwise it could enter only through a greenfield venture.
It has already earmarked a capital expenditure of Rs 36,000 crore for its proposed GSM venture. As first reported by DNA Money on November 9, Reliance is floating a tender for 75 million GSM lines.
It is already in a spat with CDMA technology proprietor Qualcomm Inc over royalty fees.
“We haven’t approached anyone nor has anyone approached us,” sources in Reliance Communication told DNA Money. A Hutch-Essar spokesperson said “It’s not the company’s policy to comment on speculation.”
But the confluence of factors surrounding the troubled alliance reveal that the rumours may have some credibility. It could be posturing by the Hong Kong billionaire who’s finding his Indian partner too difficult to manage.
The Ruias have held up the merger of BPL’s Mumbai operations for a higher stake in Hutch-Essar. This could be Li Ka-shing’s turn to return the compliment, analysts said.
Industry sources said talks were held at the promoters’ level, but the seriousness of these could not be ascertained.
Hutch-Essar’s valuation is estimated at around $12 billion.
But a source pointed out that the valuation would be around 20%, if at all the sale happens. An industry insider said, “there are people in play”, referring to sale possibilities.
Recently, Egypt-based Orascom Telecom had triggered speculation that HTIL was up for sale.
Orascom, which had picked up 19.3% stake in Hutchison Telecom for $1.3 billion last December, wanted to increase its holding considerably in the company.
But subsequently, Orascom changed its stand. At that point, a top industry source had said Hutch did not have any plans to sell.
In another development, a senior executive of HTIL had recently said that Hutch-Essar IPO (initial public offering) was not scheduled for any time soon.
As reported earlier, Hutch-Essar was gearing up for an IPO, but the plans were shelved somewhere along the way, perhaps over differences between the JV partners in India. Besides its IPO plans going awry, even the proposed merger of Hutch Essar with BPL Mobile in Mumbai has been thrown off gear.
Will the Hong Kong billionaire sell out, or is it a ploy to get the Ruias to come around, the coming months will tell.
Possibilities & reasons…
A Blackstone-ADAG combined acquisition offers Anil Ambani a ready and profitable GSM operation. It also gives Li Ka-shing, the promoter of Hutchison Telecom, Hong Kong, an opportunity to hit back at Essar.
Essar’s Ruias have held up the merger of BPL’s Mumbai operations, its most profitable, for a higher stake in Hutch-Essar
posted by InCar Group Press Room at 23:47
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