Spice Telecom and Idea Cellular are in talks for a possible merger. Idea is looking to buy out Spice and then issue stock in the newly merged company to Spice promoters. Subsequently, Spice will hand over management control to Idea. Though this will give Idea a ready entry into two new circles and a large user base, the Birlas are reportedly not willing to pay Spice’s quoted price of over $1 billion for the buyout. Investment banking sources are predicting the deal size to be Rs 35-40 billion in cash and equity.
Meanwhile, Telekom Malaysia, which has 49 per cent stake in Spice, reportedly prefers to partner with Idea Cellular. According to sources, the deal is expected to close before Spice’s IPO. PostIPO, the acquisition could become complex.
