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Date Time:07-01-2009 05:28
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Reliance and MTN decide to end talks of merger
Bundeep Singh Rangar, Chairman of IndusView Advisors discusses the impact of end of merger talks between Reliance Communication and MTN on India Inc’s global ambitions with NDTV Profit
Ratings: 
RIL ready to go to court over RCom-MTN issue
The current round of feud among the Ambani brothers is taking a new turn with sources in Reliance Industries Limited (RIL) saying that RIL is ready to go to court over Reliance Communications-MTN merger issue.
India’s billionaire Ambani brothers slug it out in telecom row
India’s billionaire Ambani brothers are battling again — this time over a blockbuster deal being negotiated by the younger sibling Anil to create an emerging-market telecoms behemoth.
The long-simmering feud flared anew last week when older brother Mukesh Ambani, head of Reliance Industries Ltd, India’s biggest private firm, told South African telecom giant MTN he had first right of refusal to buy a controlling stake in Anil’s Reliance Communications.
Reliance Communications entered exclusive talks in late May to combine with MTN to build a telecoms giant that would reach from Asia to Africa to the Middle East with a market capitalisation of up to 70 billion dollars.
MTN, Africa’s largest mobile operator, says it is still going ahead with the talks. “Nothing has changed. We are still having talks,” MTN spokeswoman Nozipho January-Bardill said.
“Talks are on track — in fact they are progressing well,” said a Reliance Communications official.
But legal experts say the row, which hinges on a settlement deal involving the carve-up of the Reliance empire after the 2002 death of the brothers’ wheeler-dealer father Dhirubhai Ambani, could throw a spanner in the works.
On Saturday, Anil threatened legal action against his brother if he tries to block the deal, a Reliance Communications source said, as the battle in India’s richest family heated up.
If Reliance Industries Ltd (RIL) “chooses to take any legal action, the same will be vigorously defended by Reliance Communications, and Reliance Communications will claim costs and damages from RIL,” the source said.
RIL insists a 2006 pact stipulates a decision on a majority stake sale in any of the companies belonging to the original group can only be taken after consultations with parties involved in the settlement.
“We feel we have a very strong and sound legal case,” said a Reliance source.
Reliance Communications, flagship of Anil’s group, has accused RIL of seeking to “disrupt creation of one of the world’s most valuable communications companies.”
The brothers appeared to work well together when their father was alive but relations started souring after they inherited the oil-to-communications empire in 2002 from Dhirubhai, who started out as a petrol pump attendant.
The discord between the stockily built Mukesh and the athletic Anil, who is a vegetarian teetotaler, came to a head in 2004.
The trigger came after Mukesh, known as a stickler for detail with a head for executing large projects, had the RIL board pass a motion telling all directors, including Anil, to report to him, saying it was his father’s wish.
Anil, who had always been the more outgoing, appearing frequently on society pages and jogging along Mumbai’s waterfront, fought back in what turned into a mud-slinging corporate soap opera.
The only thing the brothers agreed on was their reverence for the Ambani family matriarch Kokilaben, and they asked her to broker a deal which brought a temporary fraternal ceasefire and the carve-up of the Reliance conglomerate.
Mukesh kept the oil, gas and petrochemicals businesses of the group flagship Reliance Industries. Anil got Reliance Energy, one of India’s biggest power utility firms, the phone company which is his group’s flagship, and finance arm Reliance Capital.
But the deal did not bring harmony and even though the brothers still live in the same 18-storey mansion in the ritzy south Mumbai area, they rarely speak, according to those who know them.
Mukesh, listed by Forbes as the world’s fifth richest person with a net worth of 43 billion dollars, and Anil ranked sixth with 42 billion dollars, have been competing to outdo each other since their father’s death, observers say.
In fact, the last time the two US-educated brothers seemed truly united was at their father’s funeral pyre in 2002 where they stood grieving side by side, they say.
Lawyers believe their latest row could result in a protracted court battle.
Source: afp.google.com
MTN says will pursue Reliance talks as ownership row flares
South African telecom giant MTN said on Saturday it was still pursuing tie-up talks with Reliance Communications after a dispute erupted over who has the first right to buy the Indian cellular operator.
The statement came after billionaire Mukesh Ambani, head of Reliance Industries Ltd (RIL), asserted late on Friday that he had the first right of refusal to purchase his estranged younger sibling Anil Ambani’s controlling stake in Reliance Communications.
“Nothing has changed. We are still having talks with Reliance Communications,” MTN spokeswoman Nozipho January-Bardill told AFP from Johannesburg, declining to comment further.
But the claim by Mukesh Ambani, India’s wealthiest man, could derail the 70-billion-dollar merger talks between Reliance Communications and MTN, Indian media quoted lawyers as saying.
The row signalled another low in relations between the battling brothers who had been joint owners of the sprawling Reliance empire before carving it up in 2005 after being unable to work together.
Reliance Communications, India’s second-largest mobile phone company, called RIL’s assertion “legally and factually untenable.”
Reports have said the deal would involve a so-called “reverse merger” under which Reliance Communications would become a subsidiary of MTN but with Anil as the largest single shareholder and likely chairman of the merged entity.
Reliance Communications, which has 48 million subscribers, accused RIL in a statement of seeking to “disrupt creation of one of the world’s most valuable communications companies.”
A source close to the talks told AFP this week the two sides were at an “advanced stage” in efforts to create a global top-10 telecoms giant stretching from Asia to the Middle East and Africa with a 116 million subscriber base.
MTN, which has 68 million subscribers, is Africa’s largest cellular operator. The two sides entered discussions in late May to build an emerging market powerhouse after India’s top mobile phone company Bharti Airtel hung up on talks with MTN in a dispute over control.
Reliance Communications said RIL’s claim was “borne out of mounting despair and frustration” over the “continuing success” of Anil Ambani’s group.
But RIL hit back, saying it had “in good faith” notified both the Anil Ambani group and MTN of stipulations in a January 2006 agreement that it had the right of first refusal to buy the controlling stake in Reliance Communications.
However, Reliance Communications said the agreement had “unilaterally” been signed by RIL when telecom company was under RIL’s control. It said a court ruled the agreement “unfair and unjust” in October 2006.
Indian media reports quoted corporate lawyers as saying both brothers could have a strong case and the matter could end up in the courts.
The latest row stems from a mud-slinging feud that broke out between the brothers over control of the multi-billion-dollar Reliance corporate empire left to them by their rags-to-riches father Dhirubhai Ambani.
The bruising battle ended in three years ago after their mother Kokilaben brokered a deal. Under the deal, the brothers split up India’s largest private sector conglomerate.
Mukesh kept control of the oil, gas and petrochemicals businesses of the group flagship Reliance Industries. Anil got Reliance Energy, one of India ’s biggest power utility firms, the telephone company and Reliance Capital, the group’s finance arm.
Source: afp.google.com
MTN says will pursue Reliance talks amid Ambani family feud
South African telecom giant MTN said Saturday it was still pursuing merger talks with Reliance Communications amid a family feud over who has the first right to buy the Indian cellular operator.
The statement came after billionaire Mukesh Ambani, 51, head of Reliance Industries Ltd (RIL) asserted he had first right of refusal to purchase his estranged younger brother Anil Ambani’s controlling stake in Reliance Communications.
“Nothing has changed. We are still having talks with Reliance Communications,” MTN spokeswoman Nozipho January-Bardill told AFP from Johannesburg, declining to comment further.
“Talks are on track, in fact they are progressing well,” said a Reliance official, who asked not to be identified.
The claim by Mukesh Ambani, India’s wealthiest man, could threaten the 70-billion-dollar merger talks between Reliance Communications and MTN, Indian media quoted lawyers as saying.
The news made the front pages of Indian business press, with Mint newspaper headlining “Ambani brothers at each other’s throats,” and the Business Standard declaring “Mukesh calls MTN to disconnect Anil”.
The row signalled another low in relations between the battling brothers who were joint owners of the Reliance empire before carving it up in 2005.
Reliance Communications, India’s second-largest mobile phone company, called RIL’s assertion “legally and factually untenable”.
Reports have said a deal would involve a so-called “reverse merger” under which Reliance Communications would become a subsidiary of MTN but with Anil as the largest single shareholder and likely chairman of the merged entity.
Reliance Communications is the flagship of Anil Ambani’s group and has 48 million subscribers. It accused RIL of seeking to “disrupt creation of one of the world’s most valuable communications companies”.
The row erupted after a source close to the talks told AFP earlier in the week the two sides were at an “advanced stage” in efforts to create a global top-10 telecoms giant stretching from Asia to the Middle East and Africa with a subscriber base of 116 million.
MTN, which has 68 million subscribers, is Africa’s largest cellular operator. The two sides entered exclusive 45-day discussions on May 26 to build an emerging market powerhouse after India’s top mobile phone company Bharti Airtel ended talks with MTN in a dispute over control.
Reliance Communications said RIL’s claim was “borne out of mounting despair and frustration” over the “continuing success” of Anil Ambani’s group.
RIL hit back, saying it had “in good faith” notified both the Anil Ambani group and MTN of stipulations in a January 2006 settlement agreement that it had first right refusal to buy the controlling stake in Reliance Communications.
However, Reliance Communications said the pact was “unilaterally” signed by RIL when it was under RIL’s control.
It said the Bombay High Court ruled the agreement “unfair and unjust” in October 2006 — a ruling Reliance Industries reportedly appealed.
Indian media reports quoted corporate lawyers as saying both brothers could have strong cases and the matter could end up in the courts.
The latest fight stems from a feud between the brothers over control of the multi-billion-dollar Reliance empire left to them by their father Dhirubhai Ambani.
The bruising fight ended three years ago after their mother brokered a deal under which the brothers split up India’s largest private sector conglomerate.
Source: afp.google.com
Anil, MTN alliance talks gather pace
Anil Ambani-controlled Reliance Communications (R-Com) and African telecom giant MTN are expected to complete the due diligence process by tomorrow and move into the next stage of negotiations for the proposed alliance, sources said here today.
R-Com officials including Punit Garg, president of Reliance Globalcom, and S.P. Shukla, president (personal business), along with the company secretary and officials from the legal department are expected to return from London on Tuesday.
No formal discussions have taken place as yet on the equity swap ratio under the deal that will create the sixth largest telecom operator in the world. Talks on this contentious issue will begin later this week.
Over the weekend, R-Com president Anil Ambani along with other officials held meetings with Phuthuma Nhleko and MTN chief financial officer Rob Nisbet in London.
So far, both sides have been discussing the broad contours of the transaction. The buzz is that it will be a reverse takeover in which Ambani will swap a substantial part of his 66.12 per cent stake in RCom for a 34 per cent stake in MTN.
Sources said Ambani was not averse to R-Com becoming a subsidiary of MTN as long as he emerges the single largest stakeholder in MTN.
R-Com’s shares rose Rs 7.30, or 1.34 per cent, before closing at Rs 554.10 on the Bombay Stock Exchange.
Meanwhile, MTN shares declined 4.65 per cent after opening at Rand 141 and were trading at Rand 134.30 in the evening on the Johannesburg stock exchange
Source: . telegraphindia.com
London listing for Reliance Communications
The ADAG company Reliance Communications may opt for a secondary listing in London of the new entity if it can pull-off the planned takeover of the South African telecom firm MTN. RCom plans to increase liquidity of shares in the global market by the London listing.
Reliance is in exclusive talks with MTN for a potential combination of their businesses. The exclusive talks period of 45 days started on May 26. The due diligence is currently in the final stages and is likely to be concluded soon.
Industry sources said MTN’s top brass including Mr Azmi Mikati, CEO of the investment unit that is MTN’s second-largest sha-reholder and Mr Phuthuma Nhelko, CEO, MTN, are positively inclined towards a LSE listing of the merged entity.
However, the combined entity would continue to be listed in Johannesburg through MTN and in Mumbai through Reliance.
Sources said both the companies are currently working out the swap ratio. It is understood that Mr Anil Ambani wants to exchange his 66 per cent stake in RCom under a mechanism yet to be agreed for a 34.9 per cent stake in MTN.
The broad contours of the final agreement between them regarding share swap, modalities are likely to be finalised in the next 10 days, said industry sources.
Source: howrah.org
India’s Reliance Communications plans merger with MTN
Anil Ambani, India’s second-richest man, is planning a secondary listing in London for a new global telecoms giant after the planned merger of his Reliance Communications with MTN, of South Africa, The Times has learnt.
Reliance, India’s second-biggest mobile operator, is in talks with MTN on a deal to create one of the world’s ten largest telecoms companies, worth an estimated $70 billion (£35 billion) and with 116 million subscribers worldwide.
The talks began on May 26 after Bharti Airtel, India’s biggest mobile operator, dropped out of negotiations with MTN, South Africa’s largest.
Sources close to the Reliance-MTN deal said that the negotiations, which started in secret several months ago, were going well and were likely to be concluded before the end of a 45-day exclusivity period.
The combined entity would retain its listings in Johannesburg through MTN and in Bombay through Reliance, but would seek a secondary listing in London later in the year, the sources said. Mr Ambani discussed the plans with Azmi Mikati, the chief executive of the investment unit that is MTN’s second-largest shareholder, in London last week in what is believed to have been their first meeting since the talks began.
The deal would not affect the planned listing in London of Reliance Globalcom, a subsidiary of Reliance Communications, the sources said.
The Reliance-MTN deal is complicated by restrictions on foreign ownership in India and South Africa and political sensitivities in each country about which company would be dominant.
Under South African rules, buying 35 per cent of a company obliges the purchaser to make an open offer for the rest. India limits foreign ownership in the telecoms sector to 74 per cent and a purchase of 15 per cent of a company triggers a mandatory open offer for another 20 per cent.
Mr Ambani owns 66 per cent of Reliance Communications, valued at about $20 billion, and intends to exchange this under a mechanism, yet to be agreed, for a 34.9 per cent stake in MTN. The deal would represent the biggest foreign direct investment in India to date and Mr Ambani would become the single largest shareholder in the South African company.
Although the value of that MTN stake has yet to be agreed, it could constitute one of the biggest investments by an Indian company overseas, alongside Tata Steel’s $13 billion takeover of Corus last year.
The deal could involve cash as well as equity to avoid breaching the restrictions - especially on Reliance, which is already 11 per cent foreign-owned.
Mr Ambani is in talks with private equity companies and “all the major” sovereign wealth funds, which could help the funding. The sources said that Mr Ambani was pushing to become chairman of the combined entity, although that had yet to be agreed between the two sides.
Phuthuma Nhelko, the chief executive of MTN, is expected to continue to act as the executive head of the merged entity.
The sources gave no further details, but Mr Ambani is reported to be offering to buy MTN’s shares at a significant premium in exchange for management control.
India’s Economic Times reported yesterday that the two sides were negotiating the ratio for a share swap. Mr Ambani was pushing for 66 MTN shares for 100 Reliance ones, while MTN wanted 51 MTN shares for 100 Reliance shares, it said.
Face value
MTN
— MTN was launched in 1994
— It has a market value of about $38 billion and more than 68 million customers across 21 countries in Africa and the Middle East
Reliance
— Reliance Communications is valued at just under $30 billion and has 48 million subscribers
— It is the flagship company of Reliance Anil Dhirubhai Ambani Group, the industrial conglomerate run by the billionaire Anil Ambani
Source: business.timesonline.co.uk
Merged Reliance, MTN Would Seek London Listing, Times Reports
Reliance Communications Ltd., India’s second-largest mobile-phone operator, is planning a secondary listing in London when its proposed merger with South Africa’s MTN Group Ltd. is completed, the London-based Times reported.
Reliance is in talks with MTN about forming a telecommunications company valued at about $70 billion, with 116 million subscribers, the newspaper said.
The company formed by the merger would continue to be listed in Johannesburg and Bombay, the newspaper said, citing people close to the deal.
Source: bloomberg.com
Reliance close to a deal with MTN Group
Reliance Communication is close to signing a deal with the South African telecom company MTN.
The two companies are currently locked in discussions to decide the share swap ratio.
The deal is likely to make ADAG the single-largest shareholder in MTN.
Sources say that the two companies are also discussing the structure of the management of the entity after the deal is confirmed.
It is likely that Anil Ambani himself is going to join the MTN board as either Chairman or co-Chairman.
Reliance is working with Deutsche Bank on this deal which is acting as the financial advisor to the company.
Source: business.techwhack.com