Signed and sealed

15 March 2007 By Mike Verdin

The mobile group has given the minority partner in its Indian mobile purchase the right to exit at $5bn even if their joint venture fails. That s a valuable option. But that looks the price Vodafone was willing to pay to ensure another big deal didn t fall flat.

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Vodafone has handed exit rights to Essar Group as part of a deal for running Hutchison Essar, their Indian mobile joint venture.

The deal gives Essar the right to sell its 33% stake in Hutch Essar at $5bn during the year between the third and fourth anniversaries of Vodafone taking control of the joint venture. Essar will alternatively during that period be able to sell between $1bn and $5bn of its stake, which will be valued at the time by three independent investment banks.

The agreement also hands chairmanship of the joint venture to Ravi Ruia, Essar Group's vicechairman.

Vodafone will have operational control of the business, which will be renamed Vodafone Essar and adopt the Vodafone brand. It will also nominate twothirds of the board, with Vodafone chief executive Arun Sarin appointed vicechairman of the joint venture.

Vodafone last month won the auction for Hutchison Telecommunications' 67% stake in Hutch Essar with a $13.1bn bid, including debt. Vodafone expects the deal to close in the coming weeks. The deal valued Essar Group's stake at $5.6bn.

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