Moneycontrol
Mar 20, 2017 11:16 AM IST | Source: Moneycontrol.com

Idea Cellular tanks 15% on profit taking after merger finalised with Vodafone India

The combined entity will become the country's largest telecom operator by subscriber case followed by Bharti Airtel and Reliance Jio.

Idea Cellular tanks 15% on profit taking after merger finalised with Vodafone India

Moneycontrol News

Idea Cellular shares crashed 15 percent after rising as much as 15 percent in opening following amalgamation of the company with country's second largest telecom operator Vodafone India.

One reason is profit booking as lot of positions had been built up ahead of this deal that indicated that news already discounted in the stock. The share price gained around 50 percent ahead this news of merger.

Other reason could be that investors may be concerned about the pricing of deal as sources said the merger might have done at the price of Rs 72 per share, though the contours of deal are not known.

Idea Cellular in its filing said, "Vodafone will own 45.1 percent of the combined companty after transferring a stake of around 4.9 percent to promoters of Idea for Rs 3,874 crore in cash concurrent with the completion of amalgamation."

Promoters of Idea will hold 26 percent of the combined entity and the balance will be held by public, it added.

Sources told CNBC-TV18 that Aditya Birla Group first received 21.1 percent stake in the combined entity by way of the merger and then the group bought 4.9 percent stake at current market price to increase stake to 26 percent.

As per the deal, the Aditya Birla will have the right to buy 9.5 percent stake in combined entity at Rs 130 per share while Vodafone will sell shares in combined company to equalise its shareholding with Aditya Birla Group.

The combined entity will become the country's largest telecom operator by subscriber case followed by Bharti Airtel and Reliance Jio.

Idea-Vodafone India expects completion of the deal by 2018.

Implied enterprise valuation of Vodafone India stood at Rs 82,800 crore and Idea at Rs 72,200 crore.

At 10:38 hours IST, the stock was quoting at Rs 98.75, down Rs 9.15, or 8.48 percent amid high volumes on the BSE.

Disclosure: Reliance Industries, the parent company of Reliance Jio, owns Network 18 that publishes Moneycontrol.com.

By Sunil Shankar Matkar
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