Financial Daily from THE HINDU group of publications
Thursday, Jul 04, 2002
Info-Tech - Telecommunications
Corporate - Mergers & Acquisitions
Idea Cellular-BPL merger in a limbo
MUMBAI, July 3
MUCH speculation is doing the rounds on the fate of the merger talks between the cellular giants, BPL Communications and Birla Tata-AT&T (now Idea Cellular Ltd).
The speculation is occasioned by the fact that it has been a whole year since the signing of the MoU by the companies for what they said would be the biggest M & A deal in the country, the joint enterprise value being above $2 billion.
According to sources, the deal appears to have gone into a "comatose" state, indicating "a deadlock of some sort." This speculation finds reinforcement in the Birla Tata-AT&T group launching its new corporate identity `Idea Cellular', said sources.
However, sources close to both the groups insisted that both parties were "still extremely interested." They denied that any delay was on account of financial difficulties reportedly faced by one of the parties.
The MoU had certainly expired, they admitted, but extending its validity was only a technical issue and a matter of time.
There were two issues delaying talks, they claimed. One was the lawsuit where CDC Advisors, investors in BPL Communications, had taken the latter to court for not consulting them on the proposed merger. The other was the fact that each of the parties to the proposed merger had a telecom licence for Maharashtra, something not allowed by the regulations.
Getting rid of the Maharashtra licence was becoming very difficult, said sources.
It would be a very large deal, said an official with one of the parties to the MoU. It means getting together officials of the Tata, the Birla and BPL groups and in addition Orange and AT&T as well as AIG officials. "A mega deal does not happen overnight," the official said.
Birla-Tata-AT&T (Idea Cellular) was to have had an equity stake of 50.68 per cent in the joint venture, and the BPL consortium 49.32 per cent.
At the time of announcement of the MoU, the parties to it said the actual merger could take three months' to six months' time.
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