Not against Essar's IPO plan: Vodafone

Vodafone today said it was not against Essar conducting an Initial Public Offering (IPO) for their 33 per cent stake in Vodafone-Essar JV, but alleged the Indian firm did not provide material information to the Securities and Exchange Board of India (Sebi) and Bombay Stock Exchange (BSE) on the proposed merger of two companies. Essar, however, dismissed these allegations and said the company had already clarified its stand.

Essar has proposed to merge its Essar Telecommunications Holding Private Limited (ETHPL), which has 11 per cent interest in Vodafone-Essar joint venture, with another listed company, Indian Securities Limited (ISL), of the group. Vodafone has objected to this merger, saying the move may distort the valuation of the JV.

“The merger scheme between ISL and ETHPL is fully compliant with all applicable Indian laws, capital and financial sector regulations,” Essar said.

“Vodafone has not blocked Essar from conducting an IPO of its interest in Vodafone Essar. We have no objection if Essar wishes to IPO its stake,” Vodafone said in a statement. But it continues to object to the proposed merger, saying this was contrary to what has been stated in the ISL merger scheme document and it was not disclosed to the shareholders of the ISL.

“Vodafone continues to believe that material information has not been provided to the market and it has raised its objections with the Madras High Court, BSE and Sebi,” Vodafone said.

The British company had last week written to Sebi to probe a sudden spurt in the prices of ISL shares, alleging insider trading in the scrip. Essar had termed the allegations absolutely baseless.

Vodafone Essar is the third-largest telecom operator in India with 124 million mobile subscribers. Vodafone has about 67 per cent interest, while the remaining is with Ruias-led Essar in the joint venture.

Essar had earlier attacked Vodafone, saying the British company was trying to gain 100 per cent control of the telecom JV, Vodafone Essar, at an “artificially depressed value” and that was why it was objecting the proposed merger.

“The merger scheme between India Securities and ETHPL is fully compliant with all applicable Indian laws, capital and financial sector regulations,” Essar had said.

Vodafone, which has sought to intervene in the proceedings governing the merger scheme in the Madras High Court, is neither a shareholder nor a creditor of any of these companies and has no legal capacity to challenge this merger, it had said.

Vodafone, on the other hand, alleged the consent of ISL shareholders appears to have been obtained without material disclosure, as the merger scheme document does not even mention Vodafone Essar.