Voda, Idea clinch $23b-merger deal
To be top player in India
This deal will mark the third major consolidation in the industry in the recent past following rising competitive pressures due to the entry of Reliance Jio. PTI photo
With this deal, the combined entity of Vodafone and Idea Cellular, which are India's number 2 and 3 mobile players, respectively, will overtake Bharti Airtel in a bid to tackle a raging price war in the world’s second-largest market.
This deal will mark the third major consolidation in the industry in the recent past following rising competitive pressures due to the entry of Reliance Jio.
Both entities have reached an agreement to combine their operations in India (excluding Vodafone’s 42% stake in Indus Towers). Vodafone will own 45.1% of the combined company after transferring a stake of 4.9% to Aditya Birla Group for Rs 3,900 crore ($579 million) in cash, concurrent with the completion of the merger.
The Aditya Birla Group will then own 26% and has the right to acquire more shares from Vodafone under an agreed mechanism with a view to equalising the shareholdings over time.
Kumar Mangalam Birla, the chairman of Aditya Birla group, will remain the chairman of the combined entity.
Vodafone will have the sole right to appoint the chief financial officer. Both Vodafone and the Aditya Birla Group will jointly agree on the appointment of the chief executive officer and the chief operating officer. The companies, however, did not disclose details about the likely branding and the name of the merged entity.