A successful acquisition of the 67 percent stake held by Hutchison Telecommunication International Ltd. and its associates in India's Hutchison Essar Ltd. would give Vodafone gain a strong presence in one of the world's fastest growing mobile phone markets.
But Vodafone, already the world's biggest cell company, may face a bidding war and contractual complications in targeting Hutchison Essar -- a joint venture in which the other 33 percent is held by an Indian conglomerate, the Essar Group, that some legal experts say holds a right of first refusal to buy Hutchison Whampoa's stake.
About 15 senior officials from Vodafone are in India to start a due diligence process, said reports in the Economic Times and Business Standard newspapers.
The London-based company has hired accounting firm Ernst & Young to scrutinize Hutchison Essar's books and the New Delhi-based law firm Trilegal to assist in the process, the reports said, without naming any source.
Vodafone, Essar Group and Hutchison's Indian office declined to comment on the reports.
News reports have said Essar is interested acquiring its Hong Kong-based partner's stake in Hutchison Essar. Also in the race for what could become the India's biggest corporate buyout are Reliance Communications, India's second-largest mobile phone company, Malaysia's Communications Bhd. and Egypt's Orascom Telecommunications.
Vodafone emerged a front runner last week after making an approach that reportedly valued all of Hutchison Essar Ltd. at between $17 billion and $18 billion. It was unclear whether Vodafone might attempt to acquire Essar Group's 33 percent stake as well.
Differences have reportedly arisen over interpreting the shareholders' agreement signed between Hutchison and Essar Group.
The Business Standard reported that Essar has the first right to refuse any equity sale that brings Hutchison's stake below 40 percent in the joint venture and in which a rival mobile phone operator holds 10 percent or more.
The Economic Times said Hutchison insists Essar's consent would be required only if the acquiring company was a rival in the Indian market. If it is Vodafone, such restrictions wouldn't apply, the report said without naming any Hutchison official.
source : biz.yahoo.com
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