Essar Telecommunications Holdings Private Limited (ETHPL) may be amalgamated with India Security Limited, according to news reports. This step, if taken, would make available Vodafone Essar?s shares on various stock exchanges.
Through ETHPL, Essar holds about 11 per cent stake in Vodafone Essar, and the proposed amalgamation will pave the way for India Securities to own the stake. The listing of one of the Essar group holding firms is to enable price discovery of Vodafone Essar shares, as an initial public offering does not seem like a viable option for the company presently.
Prior to this too, the Essar group has often stated that it has three options, complete sale of the 33 per cent it holds in Vodafone Essar; a partial stake sale; or, status quo. The group has until May 10, 2011 to make a decision.
The amalgamation is aimed at unlocking value and market assessment of the telecom assets of the Essar Group. Also, according to documents filed with the Madras high court, where the amalgamation proposal awaits approval, the merger will help India Securities diversify into the infrastructure sector, as a stakeholder in a leading telecom company.
Meanwhile, the Essar group has obtained assurance from Vodafone Group Plc, wherein the company has agreed to a floor price of $5 billion for its one-third stake in the company.
