Idea has acquired Spice Telecom and the deal consists of 4 transactions:
- Idea will acquire the Modis’ 40.8% stake in Spice (for Rs 2,720 crore).
- Idea will launch the mandatory 20% open offer for the Spice shareholders, jointly with Telekom Malaysia International (TMI).
- Idea will merge Spice with itself and offer a 14.99% stake to TMI through a preferential allotment.
- The Idea-TM combine will launch the open offer at Rs 77.30 jointly with TMI, which now holds 39.2%in Spice
Idea will earn Rs 7,294 crore ($1.7 billion, assuming an exchange rate of Rs 43) by selling the 20% stake to TMI(making it one of the largest infusions of FDI into India.)
Spice shareholders will get 49 Idea shares (after the TMI preferential allotment)for every 100 shares they hold and the deal is supposed to be over by end of 2008.
The deal gives Idea an entry into the Punjab and Karnataka markets, and Spice’s 4.4 million customers, while Spice founders, Modi plans to expand into entertainment, handset business.
The Indian telecom space is heating up with deep pocket players’ entry like Virgin and Vodafone.
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