Vodafone overpays to win control of Hutchison Essar, India

Link: Vodafone outbids rivals to win Indian firm | New media | MediaGuardian.co.uk

Vodafone won control of Hutchison Essar, India’s fourth largest mobile phone operator, last night in a deal that valued the company at almost $19bn (£9.6bn). It is the biggest ever foreign deal struck in India and Vodafone’s third biggest acquisition after Mannesmann and Airtouch.

Vodafone is acquiring the 67% owned by Hutchison Telecommunications, which is controlled by Hong Kong- based billionaire Li Ka-shing. The UK group is paying $11.1bn and will assume net debt of $2bn. Vodafone outbid three Indian groups, whose bids are understood to have valued Hutchison Essar at some $16bn

.The price tag is considerably higher than expectations and is likely to cause consternation among Vodafone’s shareholders. The group’s chief executive, Arun Sarin, had said on several occasions that he would not overpay. Last night he insisted he was “delighted” with the deal. Mr Sarin said: “We are proud owners of this business. We have got it at a reasonable price and we are thrilled.”

Whether he overpayed or not, I think it’s still good for them to continue expansion, particularly in that marketplace.