Piramal agrees to sell Vodafone India stake for US$1.5 billion
PIRAMAL Enterprises Ltd said it agreed to sell its entire stake in Vodafone India Ltd. for 89 billion rupees (US$1.5 billion) to an indirect subsidiary of Vodafone Group Plc. The seller’s shares rose.
Piramal, a maker of drugs and glass containers, agreed to sell its stake of about 11 per cent to Prime Metals Ltd, it said in a statement. The deal values Vodafone India’s shares at 1,960 rupees apiece, according to the statement. Mumbaibased Piramal said it acquired the shares at an average price of 1,290 rupees in fiscal 2012.
Vodafone Group Chief Executive Officer Vittorio Colao is reshaping the company after agreeing to sell its 45 percent stake in Verizon Wireless for US$130 billion.
The Newbury, England-based company received government approval to buy out its local partners in India in February.
“This was part of Vodafone’s strategy to increase their stake in the Indian unit and pure profit booking for Piramal,” Harit Shah, a Mumbai-based analyst at Nirmal Bang Equities Ltd, said by phone.
“The group is flush with cash from their Verizon deal and are using it to scale up in markets such as India, where data traffic is showing 70 to 100 per cent growth year on year.”
Piramal jumped as much as 7.3 per cent, the most since Feb 28, to 577.1 rupees and traded at 565.35 rupees as of 11.28 am in Mumbai. India’s benchmark Sensex index was little changed. India’s cabinet cleared Vodafone Group to pay 101.4 billion rupees to Piramal and Analjit Singh, chairman of the Indian unit, for the 15.5 per cent stake it does not yet control, India’s Information Minister Manish Tewari said in February.
Colao is counting on growth in Asia and Africa to offset price wars in Europe. India, which accounts for the company’s biggest customer base and the most minutes of use, provides about 10 per cent of Vodafone Group’s revenue.
Data use at the Indian unit more than doubled in the quarter ended Dec 31 as more people used their phones to access the Web.
Piramal’s billionaire Chairman Ajay Piramal, 58, said last year the company intended the stake in Vodafone India to be a ‘short-term to medium-term investment’ and expected to reap a return of between 17 per cent and 20 per cent.
“I am glad to say that we have delivered against our targeted returns,” he said in a statement.
Piramal Enterprises provides contract manufacturing for drug companies, sells consumer-health products in India and makes inhaled anaesthetics used in hospitals and laboratory diagnostics. The company bought U.S. healthcare research provider Decision Resources Group LLC in 2012 for US$635 million to tap demand for information on the drug market.
The chairman is looking to build his company’s over-the-counter health-care business and scouting further acquisitions in finance, real estate and information management, he said in an interview last July.
The Indian government removed a 74 percent cap on foreign stakes in the mobile industry in July 2013 to attract capital amid a growing current-account deficit and tumbling rupee. — Bloomberg