Essar Group Offers Surprise Bid for Hutchinson Essar

The Indian conglomerate Essar Group has made an offer to buy out the Hutchison Group's 67% share in Hutchison Essar, a leading wireless telecom provider in India, for an approximate $17-18 billion. Hutchison Essar is a joint venture between Essar and Hutchison Whampoa of Hong Kong. The offer surprised the market and places new pressure on Hutchison Essar's other suitors to either top the bid or back away. Vodafone, which indicated last week that it is interested in the telecom, will have to reconsider, as will Reliance Communications, India's second-largest mobile operator, which has been talking with private equity firms about making an offer. Essar's offer gives it the option to match any subsequent offer made by an Indian bidder, which will work to the disadvantage of Reliance. The Hutchison Group has not yet responded to Essar's offer. Essar had been silent in recent weeks while Vodafone and Reliance made their interest in Hutchison Essar known, sparking speculation that Essar was planning either to buy out Hutchison, sell its own 33% stake, or stay on as a partner with the successful bidder. With its surprise move, Essar is now the only entity to have placed a formal bid.

• Source: Economic Times
• Related commentary: Vodafone In Booming Indian Wireless: Tread Carefully, Reliance prepares for Hutchison Essar bid (Financial Times)
• Potentially impacted stocks and ETFs: Vodafone Group plc (VOD). ETFs: WisdomTree Europe High-Yielding Equity (DEW), BLDRS Europe 100 ADR Index (ADRU), iShares MSCI EAFE Value Index (EFV)

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