Readers would recollect that the Essar group had planned to merge Essar Telecom Holdings ( a subsidiary of Essar , which holds 11% in Vodafone Essar) with India Securities Ltd, to create a backdoor entry for investment in Essar.
Reacting to this the U.K Based Company Vodafone has conveyed its protest to SEBI, BSE and the Chennai HC regarding the reverse merger scheme proposed by its JV partner Essar. Though Essar has a put option to divest its stake of 33% at $5 bn to Vodafone till May, it has proposed reverse merger of 11% into India Securities Ltd.
The prime concern of Vodafone is that shareholders of India Securities Ltd. lacked sufficient information to appropriately value the stake.
Economic times reports that as per the agreement, Essar can offer its entire 33% in Vodafone Essar for $5 Billion, but should it tender less than that, the stake would be independently valued by bankers. Thus the 11% stake in India Securities Ltd may have a different value than a third of the put option value of $5 billion.
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