The Hindu Business Line : Curtains on two thrillers

Fasten your seat-belts! The outcome of two of the biggest acquisitions involving Indian companies will be clinched soon. On January 29, the Hong Kong-based Hutchison Telecommunications is convening a board meeting to take stock of its 67 per cent equity stake sale in Hutchison Essar. The three key contenders in the fray, apart from the Essar group, are Reliance Communications, Vodafone and Hindujas.

And in the Corus takeover, the UK Takeover panel has specified January 30 as the deadline for the last bids from the rival suitors, Tata Steel and Brazil's CSN. While the deals span two different sectors: steel (mature and stable) and telecom (nascent and high-growth), they have striking parallels. One, the unifying theme of consolidation, with the winner anticipating stronger pricing power. In Corus, the winner may emerge the fifth largest player in global steel, enjoying higher pricing power in the long run. And in Hutch Essar, if Reliance succeeds, fewer telecom players in the domestic mobile arena may leave less scope for brutal pricing wars. Two, the spectre of `winner's curse' seems to be looming over both deals. The Corus deal, pegged at $ 9.6 billion (based on CSN's bid), and Hutchison Essar at $14 billion, appear to be pricing in a sizeable control premium not linked in any way to fundamentals.

And the underlying reasons for this bidding war in both the deals appear similar. In the European steel market, post Arcelor-Mittal, Corus is the only major steel player up for grabs. In the Indian telecom arena, given the scorching pace of subscriber additions, another high-profile telecom sell-out may not happen for some time.

Krishnan Thiagarajan

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