Telekom Malaysia is understood to have picked up a little less than 15% stake in Aditya Birla group’s company Idea Cellular at a price of Rs 158 a share through a preferential offer paying above $2 billion for the acquisition.
This values the Birla company over $10 billion. The preferential offer has been made to Telekom Malasyia (TM) at a substantial premium to the current market price of Idea Cellular. Idea’s scrip closed at Rs 108.25 on BSE, on Friday. Its market cap stood at Rs 28,527 crore.
Sources said TM is learnt to have paid Rs 158 a share for about 15% additional stake in Idea Cellular. Idea would now buy out the Modi's 40.8% stake in Spice Communications and merge with it and TM would have 20% equity in the merged entity. While an Idea spokesperson declined to comment on this, the company in a filing to stock exchange said the company keeps pursing growth opportunities and can not comment on the reports of TM picking up 15% additional stake in Idea Cellular and as and when any definitive proposal of any nature is considered and approved by the company's board, the company shall inform the exchange.
Had Idea not made the preferential offer to TM, the Malaysian company's stake in the merged entity would have remained at about 5.14% corresponding to its 39.5% stake in Spice after the merger. The deal was hanging on TM's insistence on a 20% stake in Idea cellular post merger with Spice and it had put this as condition to let the acquisition of Modi's stake by Idea happen, said sources.
In the final stage of the transaction, Spice would merge with Idea. Modis would get about Rs 2,500 crore for selling their 40.8% stake in Spice. An announcement to this effect is likely to be made on Wednesday 18. Sources added that this paves the way for the final stage of this tripartite deal which now shifts focus to the announcement of B K Modi selling his entire 40.2% stake in Spice.
The preferential offer for TM was a pre-condition for Spice-Idea merger as TM is keen on a bigger India play. This was the only way Idea could have got Spice, which it has been eyeing for over an year now, said sources. Also with this, TM meets its earlier plan of partnering Idea Cellular as in 2005, TM, in a consortium with Singapore Technologies Telemedia, wanted to acquire 47.7% stake in Idea Cellular. The companies wanted to buy out the stake of US telecom giant AT&T now Cingular Wireless for about $390 million. However, the Department of Telecom (DoT) raised objections to the deal and TM's ambitions. For three years under the contract, Spice would engage in partnership with Idea, TM for VAS and mobile devices.
Source: Times of India