In a surprising move, Ruias of Essar has decided to sell their 33% stake in the Vodafone-Essar joint venture for $5 billion in cash. The deal is expected to end the dispute between the two partners. With this, the Essar Group will exit completely from the joint venture.
“The Vodafone Group announces that the Essar Group has exercised its underwritten the put option over 22 per cent of Vodafone Essar. Following the exercise by the Essar Group of its put option, Vodafone has exercised its call option over the remaining 11 per cent of Vodafone Essar owned by the Essar Group resulting in a total cash payment of $5 billion. The final settlement is anticipated to be not later than November,” the Vodafone Group said in a statement.
This deal will allow Vodafone to acquire 75% stake in the company – which is one percent more from the Indian FDI norms that allow 74% direct investment from foreign firms.
To remain compliant with the FDI norms, Vodafone is reportedly looking for a new partner or could go for an IPO for one per cent stake.
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