A flare up of sibling rivalry between India’s billionaire Ambani brothers over the proposed takeover of mobile operator Reliance Communications by South Africa’s MTN is threatening to spill over into the courts.

Mukesh Ambani, through his group Reliance Industries, last week threatened to block the planned combination by claiming a right of first refusal over Reliance Communications, the flagship of his younger sibling Anil Ambani.

He has also threatened to sue MTN and Reliance Communications, India’s second largest cellular carrier, for damages if the deal goes ahead. Anil Ambani’s group on Sunday responded with legal threats of its own.

“If Reliance Industries chooses to take any legal action, the same will be vigorously defended by Reliance Communications and Reliance Communications will claim costs and damages from Reliance Industries,” the company said.

Although used to bickering between the two brothers, the suddenness and intensity of the clash has caught even seasoned watchers of the Indian corporate world off guard.

The brothers have been bitter rivals since the death of their father, Indian industrialist Dhirubhai Ambani, in 2002.

They divided their father’s empire between them in 2005 and have since each become successful in their own right, with Mukesh ranking fifth on the Forbes rich list with a fortune of $43bn and Anil, just $1bn short of him, in sixth place.

At stake in the latest dispute is a deal that would create a sprawling international mobile operator with 115m subscribers spanning Africa, the Middle East and India.

Anil Ambani is seeking to engineer a de facto reverse takeover between Reliance Communications and MTN, under which he will swap most of his 66 per cent stake in the Indian company for a 34.9 per cent stake in the combined entity.

The deal had seemed to be progressing smoothly, with an agreement expected in early July, when Reliance Industries last week suddenly wrote to MTN claiming the right of first refusal over any transfer of Reliance Communications shares by Anil Ambani.

“We shall adopt legal proceedings against them [the Anil Ambani group] to enforce our rights, which shall be in the Honorable Bombay High Court, in which we shall necessarily add MTN as one of the defendants,” the letter warned.

MTN lawyers in Mumbai examined the claims over the weekend. Both MTN and Reliance Communications say their talks are continuing as planned.

Reliance Industries said its case is based on an agreement framed in early 2006 when Reliance Communications was being carved out of the former Reliance Industries. Reliance Communications disputes the validity of the agreement, saying it was never ratified.

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