The Competition Commission of India (CCI) has approved Idea Cellular's proposed merger with Vodafone. The two had announced the $23-billion deal to create India's leader in the telecom sector.
Shweta Shroff Chopra, partner from Shardul Amarchand Mangaldas, which advised Vodafone on the deal (trilegal advised Idea) said the approval was for the first phase of the merger. While CCI has given unconditional approval, the two entities are yet to receive approval from the Securities and Exchange Board of India (Sebi).
In the first stage, domestically-listed Idea Cellular (part of Aditya Birla Group) and Vodafone India, which is unlisted, would merge their operations at a share swap ratio of 1:1. Then, Birla's holding companies would buy a 4.9 per cent stake from Vodafone at Rs 110 a share, investing close to Rs 3,900 crore.
This would increase Idea's stake to 26 per cent and bring down London-based Vodafone Plc's stake to 45.1 per cent. The Birlas would have the right to acquire another 9.5-9.88 per cent stake from Vodafone in the next four years, so that both partners eventually hold an equal stake of about 35.6 per cent each.
Sebi had asked the Aditya Birla Group for the promoters' share transaction agreement. It had also questioned why this arrangement was made part of the merger scheme.