Spice valued at Rs 6,800 crore; TMI to get 14.99% in Idea.
India's fifth largest mobile phone company, Idea Cellular, today said it has agreed to buy BK Modi's 40.8 per cent stake in Spice Communications in an all-cash deal worth Rs 2,700 crore, including non-compete fees. The deal values Spice at around Rs 6,800 crore.
Idea will buy Spice Group's shares at a price of Rs 77.30 a share — a premium of 42 per cent to Tuesday's closing price — and make the mandatory open offer to Spice shareholders at the same rate. Spice's minority shareholders, who want to remain invested in the telecom industry and do not tender shares during the open offer, will be offered Idea Cellular shares at a later date.
Reacting to the announcement, Spice shares surged 33.1 per cent to a record close of Rs 72.35 in a market that rose 0.8 per cent. Idea was up 2 per cent at Rs 102.05 a share.
Idea will add about 4.5 million customers, closing in on Bharat Sanchar Nigam Ltd, the fourth-largest carrier. Besides, it will enter Punjab and Karnataka, which account for 11 per cent of India's total wireless subscribers.
"It will give us incumbent advantage in both these circles. We are now in the big league of telecom players in the country," Idea Chairman Kumar Mangalam Birla said here today.
According to the complex agreement, TM International (TMI), the Malaysian telecommunication giant holding 39.2 per cent stake in Spice, will swap its stake for Idea shares and will be offered 469 million shares by way of a preferential allotment of shares in Idea at a price of Rs 156.96 a share. This will take TMI's stake in idea to 14.99 per cent.
TMI will invest Rs 7,500 crore for buying this stake in Idea Cellular and a part of these funds will be used to buy Modi's stake. The balance Rs 4,500 crore will be used to retire the debts in Idea's books, Birla said. TMI will get one seat on Idea's board.
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