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Vodafone to sell 9% additional stake to Aditya Birla Group post merger

In the merged entity, Vodafone will hold 50% stake, while Aditya Birla Group will hold 21%

Press Trust of India  |  New Delhi 

Photo: Shutterstock
Photo: Shutterstock

has agreed to sell 9.5 per cent additional to for Rs 130 per share after they merge their operations to create the country's largest operator worth more than $23 billion.

has filed with the the composite scheme of amalgamation between and Idea Cellular, which stated that the merged entity shall be under the joint control of the two firms and will be governed by the shareholders' agreement.

In the merged entity, will hold 50 per cent stake, while will hold 21 per cent.

Upon completion of merger, will transfer 4.9 per cent of merged entity to for Rs 3,874 crore.

Post such transfer, shareholding will increase to 26 per cent and shareholding will reduce to 45.1 per cent, according to the scheme.

The remaining 28.9 per cent will be held by other shareholders.

Also, will have the right to acquire more from at a price of Rs 130 per share, in order to equalise the shareholdings over 4 years.

If equal shareholding is not achieved within four years, will sell down its shareholding to equalise its shareholding with over the following 5 years, the scheme said.

Until equalisation, the voting rights on additional of shall be exercised jointly by and

The two firms had last month announced the of their operations in India to create the country's largest mobile phone operator with a 35 per cent market share.

The combined entity of and Idea Cellular, which are India's number 2 and 3 mobile players, respectively, will overtake Bharti Airtel and would be in a better position to take on a raging price war unleashed by newcomer Reliance Jio in the world's second-largest market.

The new company, which will come into being over the next two years, will be headed by Kumar Mangalam Birla, while will have the right to appoint chief financial officer.

The CEO and the chief operating officer will be appointed with the approval of both companies. The two firms will have three nominees each on the board of the new entity, the scheme said.

The excludes Vodafone's 42 per cent in Indus Towers and will be effected through issuing new in Idea to Vodafone, which will result in deconsolidating India.

This mechanism will facilitate reducing Group net debt by Rs 55,200 crore and lowering Group leverage by around 0.3x net debt/EBITDA, the scheme added.

Vodafone-Idea is the second in the sector to be announced this year. In February, Bharti Airtel unveiled plans to buy the Indian business of the Norway-based Telenor.

The merged venture will create India's largest mobile operator with almost 400 million users and a 35 per cent market share by customers. The deal gives India an implied enterprise value of Rs 82,800 crore and Idea an enterprise value of Rs 72,200 crore.

First Published: Fri, April 21 2017. 18:25 IST