Hutch may stall Essar group bid

Hutchison Telecommunications India Ltd (HTIL) is unlikely to give the Essar Group an option to match Vodafone's offer in the documentation of the sale of its 67 per cent equity stake in Hutchison-Essar.

Essar holds one-third stake in Hutchison-Essar. Last week, HTIL had announced that it would sell its stake in Hutch-Essar to Vodafone, the world's largest telecom company, for an enterprise value of $18.8 billion.

Sources close to the negotiations said HTIL's decision was based on the fact that the Ruia family, which controls Essar, had given Hutchison boss Canning Fok an assurance in London that it would not pursue the right of first refusal (ROFR) if a foreign company wins the Hutch-Essar deal, and provided its interests were protected. Sources close to the Ruias, however, say no such assurance was given. Both Ruia and Hutchison spokespersons declined to comment on the issue.

Top sources point out that the ROFR was signed between the Ruias and HTIL as part of the shareholders' agreement a few years ago, after an over six-month debate.They reiterate Hutchison's contention that these rights were to be given only if the stake was sold to Tatas, Bharti Airtel or Reliance Communications.

While the Ruias had pushed for an ROFR that would also include foreign companies, Hutchison did not accede to their demand.

The Ruias, who also made an unsuccessful bid to buy HTIL's stake, also had discussions with Vodafone CEO Arun Sarin where they conveyed their decision to stay invested in the company.