Failing to win government approval, Essar Group has called off a proposed merger of its mobile operations in Mumbai with Hutchison Essar Ltd. According to a new reported by Reuters Essar has given a termination notice to Hutchison Essar.
Hutchison Essar is not deterred by the rejection and plans to challenge the termination notice and push for the deal to materialize.
Hutchison Essar official told Reuters that the company is in full compliance with the terms of the deal and there is no basis for the termination.
In July 2005, Essar bought a controlling stake in two mobile services companies operated by BPL group in a deal valued at more than USD 1 billion.
Two months later, it sold BPL Mobile Communications Ltd., which has the licence to operate GSM services in Mumbai, and BPL Mobile Cellular Ltd. to Hutchison Essar for USD 1.154 billion, including assumed debt.
The government approved the deal for BPL Mobile Cellular, which operates GSM services in Maharashtra, Goa, Tamil Nadu, Pondicherry and Kerala, but did not give the go-ahead for the merger of the Mumbai operations by July 31, the mutual deadline agreed by both parties, the source told Reuters.
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