Archive for March, 2007

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Vodafone, Essar deal nearing closure

Tuesday, March 13th, 2007


It began with smiles and handshakes but soon there’s going to be a concrete deal between the Ruias of Essar and Vodafone.

NDTV has learnt that the Ruia’s negotiations with Vodafone are coming to an end and the deal could be announced soon.

A deal that will eventually see Essar getting out of the telecom business at a big price but for that to happen, the Ruias want joint management as long as they’re invested.

Besides, they also want co-branding and an option that lets them exit at a premium, which could be as high as 10 per cent over Vodafone’s valuation of Hutch. However, the big question even if Essar wants to exit, is who will buy its stake?

Stake holding

Most of Essar’s holdings are classified as foreign and as long as the 74 per cent FDI cap remains, it will be tough to find buyers.

So one option for Essar would be to hang on to their stake till telecom regulations change and 100 per cent FDI is allowed or to find Indian buyers with deep pockets.

That’s when Asim Ghosh’s role could become very important. He has 4.6 per cent stake in Hutch Essar JV and Analjit Singh another 7.5 per cent.

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RIL to merge IPCL with itself

Saturday, March 10th, 2007

In line with market expectations, the Board of Mukesh Ambani controlled Reliance Industries Limited (RIL) cleared the merger of IPCL with itself at a share swap ratio of 1:5.

The appointed date of merger with RIL was April one, 2006 (rpt) 2006, the company stated.

The Reliance Industries Board also approved an interim dividend of Rs 11 per share totaling Rs 1,748 crore including dividend tax.

Likewise, the IPCL Board approved an interim dividend of Rs six per share amounting to Rs 206 crore including dividend tax.

Following the merger, the share capital of RIL would increase from Rs 1,393.5 crore to Rs 1,453.6 crore.

RIL is the country’s largest private sector company with a leadership position in the petrochemicals industry, while IPCL is India’s second largest company in that sector.

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Italy’s Lavazza buys Barista for $125 mn

Saturday, March 10th, 2007

CHENNAI: Italy’s largest coffee company, the $1.2-billion Lavazza, has reportedly picked up 100% stake in two coffee businesses of Chennai-based Sterling Infotech Group. Lavazza is said to have signed a deal for taking over coffee chain Barista Coffee Company as well as coffee vending business Fresh & Honest of the latter, for an estimated combined valuation of around $125 million.

Lavazza was reportedly in talks with Chennai’s Sterling Infotech group, controlled by NRI takeover tycoon C Sivasankaran over the past few months. However, a formal deal is said to have been signed only now, sources told ET. International investment banker, Lazard is said to have facilitated the deal.

But senior Sterling Group officials, including director V Srinivasan failed to respond to ET calls for confirmation.

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Italy’s Lavazza to buy Barista

Saturday, March 10th, 2007

Italian coffee chain Lavazza is close to acquiring Barista. An announcement to this effect is expected shortly.

Sources close to the development said Lavazza would acquire the majority stake in Barista from ace investor C Sivasankaran. Siva, as he is popularly known, had bought 65 per cent in Barista from the Amit Judge-controlled Turner Morrison 3 years ago, and later also bought the Tata Group’s 35 per cent stake. His Sterling Group was learnt to have paid nearly Rs 65 crore (Rs 650 million) for the acquisition of 100 per cent in Barista.

Standard Chartered Bank is advising Sivasankaran while Lazard is Lavazza’s advisor.The exact size of the deal could not be ascertained. Industry sources, however, said Sivasankaran, who has perhaps never lost money in a stake sale except in the sale of his 10 per cent in Bharti Telecom back to Sunil Mittal, would extract a handsome premium from this deal as well.

Although financial details regarding the closely held coffee chain were not available, industry sources said it had posted sales of around Rs 45 crore (Rs 450 million) last year.

Coffee chain business is becoming competitive in India. Sequoia Capital India had invested Rs 90 crore (Rs 900 million) in Amalgamated Coffee Bean Trading, the owners of Cafe Coffee Day. Starbucks is likely to join hands with Planet Retail, part of the Pantaloon group, for its India entry.

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Allianz eyes pension, banking biz in India

Saturday, March 10th, 2007

Encouraged by its impressive growth in the Indian insurance market, leading German insurer and financial services provider Allianz is now looking to enter the pension, banking and asset management business in the country.

“In the mid and long term we are looking at the pension market, asset management and banking,” Allianz Group’s holding company Allianz SE board member Werner Zedelius said, while announcing a new joint venture with Bajaj Auto for distributing financial products.
In case of pension, we are awaiting regulatory details and for the other two areas we are taking a close look at the market and communicating with the regulators, Zedelius said, adding that this was an on-going process.
Allianz is already present in the Indian insurance market (both life and general insurance) through its joint venture partner Bajaj Auto.
Commenting on plans for entering into asset management, Bajaj Auto Chairman Rahul Bajaj said, both partners were looking at it, but whether they would venture into this business together or individually was still undecided.
“They (Allianz) would prefer to come with majority foreign equity…we have to decide if we are willing to come with minority equity. We will take a decision in a few months,” Bajaj said.
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Idea debuts at Dalal Street

Friday, March 9th, 2007


Kumarmangalam Birla’s big idea finally made it to Dalal Street and as soon as the telecom player listed, it proved what huge appetite investors have for a quality telecom stock.

Idea opened at a premium of Rs 15 over its issue price, hit a day high of Rs 94 to finally close at about Rs 85.

“The markets clearly want to connect to Idea cellular’s growth story and at current valuations it is coming pretty cheap,” said Kumarmangalam Birla, Chairman, Idea Cellular.

Idea currently has a market cap of about five billion dollar for the 8.5 per cent share it has of the Indian cellular market.

Bharti on the other hand has a market cap six times that of Idea, while its market share is just three and half times more (30 per cent and $25 billion).

Market share

Analysts say that this makes idea great values buy and some brokerages say there could be an upside of about another rupees 20 on the stock.

No wonder that the investment bankers who fixed the issue price are so pleased with the stock’s performance.

“When something is kept in the table for a company I think it’s a great day. Idea has done well in spite of market volatility,” said Hemendra Kothari, Chariman, DSP Merill Lynch.

The much-awaited listing of Idea cellular was more or less on expected lines, though some segments of the market were expecting the listing to be a little higher.

Kumarmangalam Birla is confident of the growth of the business going forward and says Idea will soon be able to carve out reasonable market share in competitive circles like Mumbai and will buck the declining trend in average revenue per users (ARPUs).

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