Vodafone’s Pursuit of Hutchison Essar Ltd.

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Reshma Sheikh                                                   Kanika Dahiya
 ABSTRACT
Mergers & Acquisition have become very popular throughout the
world in the recent times. This has become popular due to
globalization, liberalization, technological developments &
intensely competitive business environment. In telecom sector,
mergers and acquisitions has been increasing to a great extent and
companies are using it as a tool to increase their financial position
and goodwill in the market. Some examples of big players in the
industry are Vodafone- Hutchison, reliance- Aircel, etc. this paper
attempts to analyse the Vodafone’s Pursuit of Hutchison Essar
Ltd.
Key Words: Mergers, Acquisitions, Telecom

INTRODUCTION

The term acquisition refers to the acquisition of assets by one

company from another company. In an acquisition both
companies may continue to exist. However, throughout this
course we will loosely refer to mergers and acquisitions (M & A)
as a business transaction where one company acquires another
company. The acquiring company will remain in business and the
acquired company will be integrated into the acquiring company
and thus, the acquired company ceases to exist after the merger.
Vodafone come into picture and picked up 67% stake in
Hutchison Essar in Feb 2007. HEL had a presence in 16 out of 23
service areas in India. Vodafone will hold 52% and Essar will
continue holding 33% of stake, also other minorities will hold
remaining 15% of stake in the company. Vodafone owns and
operates networks in 21 countries and has partner networks in
over 40 additional countries. Its Vodafone global enterprise
provides telecommunications and IT services to corporate clients
in over 65countries. Essar employs more than 50,000 people
across offices in Asia, Africa, Europe and the Americas

OBJECTIVES
1. To study the performance of Mergers and Acquisitions in
Indian telecom sector.
2. To make a comparative analysis of the impact of mergers
before and after on financial performance of Vodafone and
Hutchison essar.

REVIEW OF LITERATURE

1. Mantravedi and Reddy (2008) investigate Indian acquiring

firms and found that there are minor variations that impact
the performance of mergers in different sectors of Indian
industry.
2. Swaminathan (2002) studied the sample of five companies &
found that four of the five acquiring firms improved
operating and financial synergies.
3. Surjit, 2002 carried out an analysis of 20 merging firms to
compare the pre & post takeover performance by applying a
set of eight financial ratios.
 INTERPRETATION

REASONS FOR HTIL’S EXIT FROM INDIA

 Telecom valuations were currently high in the emerging

markets (HEL was being valued at nearly US$ 20 billion)
 HEL was still a private entity after a failed attempt to go
public.
 The group was in need of cash since it had committed itself
to US$ 30 billion in investments across Europe.

BATTLE FOR ACQUISITION OF HTIL

As of November 2006, the following seven contenders for the

acquisition of HTIL’s share in HEL were each seeking to
establish or enhance their presence19.
The Hinduja Group, Altimo Telecom, Maxis Communications,
Essar India, Orascom Telecom Holding, Reliance
Communications, Vodafone.

Period of Study:

The researchers have made an attempt to study the impact or

mergers on financial performance by using information for the
period 2002-03 to 2006-07.
Data Collection:
The study is mainly based on secondary data which have been
collected through annual reports of the companies, books &
journals, newspapers, and websites, etc.
Tools:
1. Ratios
2. Data comparison
3. Income statement
4. Balance sheet

CONCLUSION

The study has concluded that M&A indeed has effect on the
operating performances of the entities involved. The earning
growth after merger found at a much higher rate resulted in
value addition to shareholders.

REFERENCES
 Fairburn, James A., Kay, John A. (1989), Mergers and Merger
Policy, Oxford University Press
 Beena, P.L. (1998), “Mergers and Amalgamations: An
Analysis in the Changing Structure of the Indian Oligopoly”,
Ph.D. dissertation, Centre for Economic Studies and Planning,
JNU Delhi
 Hutch is now Vodafone - Times of India. (2007).
In the telecom sector,
mergers and acquisitions has been increasing to a great extent and
companies
are using it as a strategic tool for improving their revenue and
efficiency. In
the past ten years, Indian telecom sector has restructuring of
the big shot
players like Vodafone-Hutchison Essar, Reliance- Aircel etc.
In the telecom sector,
mergers and acquisitions has been increasing to a great extent and
companies
are using it as a strategic tool for improving their revenue and
efficiency. In
the past ten years, Indian telecom sector has restructuring of
the big shot
players like Vodafone-Hutchison Essar, Reliance- Aircel etc.
In the telecom sector,
mergers and acquisitions has been increasing to a great extent and
companies
are using it as a strategic tool for improving their revenue and
efficiency. In
the past ten years, Indian telecom sector has restructuring of
the big shot
players like Vodafone-Hutchison Essar, Reliance- Aircel etc.