The Hindu Business Line : Essar, Vodafone reach agreement on jointly managing Hutch

New Delhi March 14 The Ruias-promoted Essar group and the UK-based Vodafone have reached an agreement on the terms for jointly managing Hutchison Essar.

The agreement includes a put option by Essar that will allow the Ruias to sell their 33 per cent stake in the cellular company over the next 3-4 years in the open market at a minimum benchmark price.

The deal between the two companies will be announced on Thursday in New Delhi. Mr Arun Sarin, CEO of Vodafone, is scheduled to arrive to ink the deal, which was finalised late on Wednesday.

Name change

The name of the company is also being changed from Hutchison Essar to Vodafone Essar. Despite being a majority shareholder, Vodafone has agreed to allow Mr Ravi Ruia to be the Chairman of the newly constituted board of the company while Mr Sarin will be the Vice-Chairman. The existing team of Hutchison Essar has been retained with Mr Asim Ghosh as the CEO of Vodafone Essar.

Vodafone had acquired 51 per cent stake held by Hong Kong-based Hutchison Telecom International Ltd at an enterprise value of nearly $19.3 billion. Discussions between top executives in Vodafone and Essar over the past few days have worked out a compromise deal that thrashes out all outstanding issues.

While Vodafone has refused to pay a premium for the Essar's stake in the mobile company, the UK based company has agreed to give a put option which means it will pay the balance in case Essar gets a lower price, compared to what Vodafone has offered HTIL, whenever it sells part or all of its 33 per cent stake over the next 3-4 years.

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