Vodafone buys out Essar JV

 
Steve Dinneen
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Vodafone has sealed a long-awaited deal to buy out its Indian JV partner Essar for an eye-watering $5.46bn (£3.4bn).

Vodafone said it will buy the 33 per cent stake owned by a collection of Essar companies, giving it a majority 74 per cent shareholding in the Vodafone Essar venture. The deal brings to an end a highly fractious relationship.

The price includes an $880m payment for Indian taxes, which neither Vodafone nor Essar believe is due and will be returned to Essar if they are proved correct.

Vodafone is now likely to pursue an IPO of a small part of the business – between one and two per cent – on the Mumbai stock exchange after surpassing Indian foreign ownership rules.

However, Vodafone boss Vittorio Colao has signalled this could be dependent on a satisfactory resolution to the ongoing $2.5bn tax dispute with Indian authorities. He has previously said it would be a positive move for the Indian stock market to have a firm of Vodafone’s international standing on its books.

The deal is part of Vodafone’s strategy to only own assets where it has control, and follows the sale of its stake in Polish operator Polkomtel last week.