Ambani acrimony builds over Reliance and MTN
Joe Leahy | Saturday, 19 July 2008
THE conflict between India's billionaire Ambani brothers over a proposed tie-up between mobile operators Reliance Communications and South Africa's MTN deepened early this month amid growing indications the feud could scupper the deal.
Representatives of Reliance Communications, India's second-largest mobile operator controlled by the younger Ambani brother Anil, failed to attend a meeting called by Reliance Industries, run by elder brother Mukesh, to discuss a resolution to the conflict.
"We are left with no alternative but to adopt such proceedings against you, as we may be advised, at your entire risk as to costs and consequences," Reliance Industries warned in a letter to Reliance Communications.
The worsening of the conflict could not have come at a more critical time for the talks between Reliance Communications and MTN.
The two companies were due to conclude a 45-day period of exclusive talks on the deal on July 08, which if successful would create the world's largest international emerging markets mobile operator.
Under the proposed tie-up, the South African operator would buy Reliance Communications but Anil Ambani would emerge as the controlling shareholder of the enlarged South African company.
He would do this by swapping most of his 66 per cent stake in Reliance Communications and topping this up with cash from other investors to secure 50-51 per cent of MTN.
The talks could be extended by two to three weeks. But the prospects for a successful deal are becoming increasingly unclear amid the growing shadow cast by objections to the takeover from Reliance Industries, which claims a right of first refusal over any sale of shares by Anil Ambani.
Reliance Industries says this right is enshrined in an agreement signed before the two brothers divided their late father's empire between them in 2006.
Representatives of Anil Ambani say the claim is invalid. But Reliance Industries' threats are nonetheless unnerving MTN, which is worried that it could become embroiled in litigation and is weighing pulling out.
Any move into India's notoriously slow and inefficient courts could be disastrous for the deal, potentially bogging it down in legal arguments.
Reliance Industries said three of its executives waited for an hour on July 07 for representatives from Reliance Communications, who never came.
Reliance Communications countered by inviting Reliance Industries to hold talks late this month, not as part of any dispute resolution process but "to clarify any doubts" that its opponent might have. Reliance Industries immediately rejected the offer.
................................
Under syndication
arrangement with FE
Representatives of Reliance Communications, India's second-largest mobile operator controlled by the younger Ambani brother Anil, failed to attend a meeting called by Reliance Industries, run by elder brother Mukesh, to discuss a resolution to the conflict.
"We are left with no alternative but to adopt such proceedings against you, as we may be advised, at your entire risk as to costs and consequences," Reliance Industries warned in a letter to Reliance Communications.
The worsening of the conflict could not have come at a more critical time for the talks between Reliance Communications and MTN.
The two companies were due to conclude a 45-day period of exclusive talks on the deal on July 08, which if successful would create the world's largest international emerging markets mobile operator.
Under the proposed tie-up, the South African operator would buy Reliance Communications but Anil Ambani would emerge as the controlling shareholder of the enlarged South African company.
He would do this by swapping most of his 66 per cent stake in Reliance Communications and topping this up with cash from other investors to secure 50-51 per cent of MTN.
The talks could be extended by two to three weeks. But the prospects for a successful deal are becoming increasingly unclear amid the growing shadow cast by objections to the takeover from Reliance Industries, which claims a right of first refusal over any sale of shares by Anil Ambani.
Reliance Industries says this right is enshrined in an agreement signed before the two brothers divided their late father's empire between them in 2006.
Representatives of Anil Ambani say the claim is invalid. But Reliance Industries' threats are nonetheless unnerving MTN, which is worried that it could become embroiled in litigation and is weighing pulling out.
Any move into India's notoriously slow and inefficient courts could be disastrous for the deal, potentially bogging it down in legal arguments.
Reliance Industries said three of its executives waited for an hour on July 07 for representatives from Reliance Communications, who never came.
Reliance Communications countered by inviting Reliance Industries to hold talks late this month, not as part of any dispute resolution process but "to clarify any doubts" that its opponent might have. Reliance Industries immediately rejected the offer.
................................
Under syndication
arrangement with FE