Vodafone to buy out Essar from JV for €3.5b

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Vodafone will acquire Essar Group's entire stake in Indian joint Venture Vodafone Essar for $5 billion (€3.54 billion).
 
The company yesterday disclosed it had exercised its option to acquire 22% of the joint venture, and Essar exercised its own option to sell the remaining 11%.
 
Under the terms of the companies' joint venture agreement, Essar had the option of selling its stake piecemeal at market value or in one go at the predetermined $5 billion price tag. This deal suggests Essar was unable to get a higher valuation for its stake in the venture.
 
The pair had clashed over this issue earlier this year, with Essar accusing Vodafone of trying to prevent it from determining the market value of its holding.
 
The transaction, expected to be settled by November, will bring Vodafone's direct ownership in Vodafone Essar up to 75%. But Indian law restricts foreign ownership of mobile operators to 74%.
 
To ensure regulatory compliance Vodafone will either sell 1% of the company to an Indian entity, or may consider an IPO for the venture, an Indian finance analyst told Bloomberg.
 
Vodafone Essar is India's second largest GSM operator after Bharti Airtel with a market share of over 23%, according to statistics from regulator Trai.