The battle for control of Hutchison Essar intensified on Thursday as Hinduja Group said it was interested in taking a large stake in India’s fourth-largest mobile phone operator.
Hinduja joins the fray in a potential bidding war for the 67 per cent of Hutch Essar put on the block by Hong Kong’s Hutchison Whampoa. Essar, the Indian conglomerate, holds the remaining 33 per cent.
Rival suitors include Vodafone of the UK, India’s Reliance Communications, and Essar itself. All are in the running for a deal that would allow aggressive expansion into the world’s fastest growing mobile phone market.
The interest from Hinduja, owner of Gulf Oil and Ashok Leyland, India’s number two truck maker, comes just six months after it sold its 5 per cent stake in the venture to Hutchison Telecommunications for $450m.
“We don’t like to enter a business in which we don’t have management control. A 5 per cent stake didn’t allow us to contribute in a meaningful manner,” said a spokesperson for Hinduja in Mumbai.
“When we sold out we asked if Hutchison was willing to divest their stake. At that point, they said no.”
Hinduja has not received a response from Hutchison Whampoa and said details such as pricing and financing would not be discussed until they received confirmation from Hong Kong. “Then we would sit down and value the price of the stake,” said Hinduja’s spokesperson.
Prior to Hinduja’s exit, the group had explored the possibility of buying Hutchison’s stake for an estimated $12bn. Hinduja employs 30,000 worldwide and has holdings in finance, autos, energy, technology and media, including Amas Bank in Switzerland and outsourcing company HTMT.
In December, Vodafone submitted an offer that would value Hutch Essar at $17bn-$18bn.
Essar last week made an initial approach to Hutchison for its stake worth $11bn, valuing the company at about $16.4bn, although it has yet to decide whether to launch a formal bid. Reliance Communications, India’s second largest mobile group, will convene a board meeting next week to discuss raising funds for a likely bid and is working with private equity groups Blackstone, KKR, Carlyle and Apax to gather financing.
