MUMBAI | KOLKATA: The whole world may have been slower than molasses in early January, still hungover from New Year celebrations, save for the trio at Aditya Birla Centre, the headquarters of the AB Group. 孟买加尔各答|:整个世界可能已经低于糖蜜在1月初,仍然心里难受的新年庆祝活动,除了三Aditya Birla中心AB集团的总部。
\n
Sushil Agarwal, group CFO and Kumar Birla’s consigliere, along with Saurabh Agarwal, investment banking rainmakerturned-Birla’s strategy head, and Ashish Adukia, also a former banker who changed stripes to join the conglomerate as its corporate finance and M&A head, flew from Mumbai to London to the Vodafone<\/a> Group headquarters to kickstart a merger conversation that was seeded last summer but had petered out.
\n
\nWaiting for them on the other side of the table was another seasoned banker — Pierre Klotz, a former HSBC and UBS veteran who heads M&A at the world’s second-largest telecom company, along with his team.
\n
Both sides knew the negotiations would be intense before a result could be achieved even as the dynamics of the competitive industry<\/a> were changing faster than anyone had ever foreseen. Only a “mother of an idea<\/a>” could have salvaged the day.
\n
\n
\n![\"\"](\"\/\/www.iser-br.com\/Themes\/Release\/images\/responsive\/ettelecom-default.jpg\")
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Ever since Mukesh Ambani’s Reliance Jio<\/a> Infocomm stormed the market with free voice and data services last September and undermined industry revenue, the only way out was to join forces and consolidate.
\n
Anil Ambani’s Reliance Communications<\/a> had already teamed up with Aircel and an alliance between the country’s No. 2 player, Vodafone, and the third-largest, Idea<\/a>, seemed the only logical way out.
\n
\n“Though Vodafone and Idea had flirted in 2016, the talks actually turned serious around the beginning of this year,” said an official in the know.
\n
\n“So getting the deal construct right was absolutely essential this time around.”
\n
Both companies had, on their own, explored buying or merging smaller operations or assets like spectrum from Norway’s Telenor or Videocon<\/a>, but those talks never fructified. In any case, these were puny operations; what was needed was grandiose.
\n
\nET spoke to multiple officials, advisers and lawyers from both sides to piece together the story of the $22-billion marriage. Nobody wanted to speak on record.
\n
\nMARRIAGE OF EQUALS<\/strong>
\nIt’s never easy when you are trying to combine and create an operation bigger than AT&T’s. More so, when one is bigger than the other. Most back-of-the-envelope calculations had estimated Vodafone India to be worth $3 billion more than Idea, including debt.
\n
Both sides also had their conditions to make the deal value-accretive for their own set of shareholders. To begin with, it had to be a merger with equal rights<\/a>.
\n
\nBirlas wanted a minimum 26% in the combined entity and a chairmanship for Kumar Birla. Vodafone too wanted to deconsolidate its Indian operations. Having invested over $30 billion in India since 2007, its experience has been rocky, hamstrung with retrospective tax charges and write-offs. It was also toying with an initial public offering (IPO) for its India operations, so cherry-picking the right strategy to grow in a market like India was absolutely critical.
\n
\nThe initial plan was to merge the two wireless operations, like RCom and Aircel, but it wasn’t practical and was rejected.
\nTo make the 50:50 JV work, it only made sense if Vodafone kept its 42% stake in Indus Towers out of the deal while Idea’s standalone towers and 11% shareholding in Indus were brought into the combined entity. Both have been looking to reduce exposure to tower assets, including selling stakes in the joint venture independently, and have said they still plan to do so before the merger gets consummated. “The construct took time and followed 4-5 days of intense brainstorming between Mumbai and London.
\n
\nBut once that was settled, the rest fell into place quickly. The intent was very clear and if one had to meet all the pre-conditions, there were not too many choices available in the first place,” added another official. “Both the operations also got valued at the same multiple.” The financial gap between the two has been shrinking in the past few months. “There is only a 10% gap in EBITDA (earnings before interest, tax, depreciation and amortisation) between Idea and Vodafone.
\n
\nOf the two, Idea has been growing faster and its margins have also improved significantly. So it wasn’t all that tough,” recalled another executive.
\n
\nDOT THE I’S, CROSS THE T’S <\/strong>
\nBut it was tough to keep everything under wraps.
\nMedia leaks in the UK and India in mid-January had forced both sides to make a joint statement by the end of the month, acknowledging the ongoing talks.
\n
\nIt was then that the plot thickened on the back of “really aggressive timelines”. Between Mumbai, London, Dubai and Abu Dhabi, the core team met a little over half a dozen times to stitch it all up.
\n
\n“You have seasoned in-house bankers on both sides. It was left to them to dot the i’s and cross the t’s like infrastructure and manpower duplication, among other things.
\n
\nBoth Pierre and Saurabh have been seasoned telecom bankers and having worked on several such transactions are fully aware of the sectoral issues. Adukia too is no stranger to M&As,” said a senior lawyer privy to the discussions.
\n
\n“No wonder, Birlas did not engage any outside bankers. Vodafone always does most of the initial work in-house and only then gets advisers on board. This was no exception.”
\n
Once the overall construct was agreed upon, both sides engaged external advisers — Morgan Stanley, UBS, Robey Warshaw, Bank of America Merrill Lynch, Kotak Investment Bank and Rothschild; lawyers S&R Associates, Slaugter and May — to begin work on documentation. From February, the operations team from both the telcos were roped in and due diligence<\/a> began.
\n“In a merger, human issues are the most sensitive. There are redundancies, frail egos. So you need to involve them at the right time.
\n
\nIt’s equally important to involve the right guys,” recalled another executive.
\n
\nOperationally, both sides had already been busy taking stock. On March 15, the Vodafone India brass met along with Vivek Badrinath, CEO (AMAP) and executive committee member of Vodafone Group, to review the state of preparedness and other operational issues with regard to the integration. The following day, the Vodafone India board met in Mumbai to further discuss the merger.
\n
\nFINAL COUNTDOWN<\/strong>
\nVodafone Group CEO Vittorio Colao and Klotz flew in on the evening of March 18.
\n
\n“The past 48 hours have been frenetic,” quipped an executive. “Negotiations went on till 3 in the morning.” On Sunday morning, Colao and his team met with Birla and his deal team at their Worli headquarters to iron out the final contours.
\n
\nA key issue still to be sorted out was naming the CEO, COO and the CFO.
\n
\nThey finally agreed that Thomas Reistien, CFO of Vodafone India, would continue in his role as would Balesh Sharma, Vodafone India’s newly appointed COO. As for the CEO, they both agreed on a candidate but chose not to announce the name as yet. Many senior Idea officials are on the verge of retirement, making it easier to manage the overlaps.
\n
\nAs an official put it: “We didn’t leave anything to chance for the last minute, but still had to discuss the script... the communication to employees, investors, employees.” As the meeting rolled on till evening, Birla also had to immediately meet and brief some of the board members.
\n
\nWith that out of the way, the Monday morning Idea board meeting and the townhalls were a cakewalk. The mega alliance of the airwaves was by then ready to face the world.
\n\n<\/p><\/body>","next_sibling":[{"msid":57744796,"title":"Samsung voice-assistant Bixby to debut with new phone","entity_type":"ARTICLE","link":"\/news\/samsung-voice-assistant-bixby-to-debut-with-new-phone\/57744796","category_name":null,"category_name_seo":"telecomnews"}],"related_content":[],"msid":57744829,"entity_type":"ARTICLE","title":"The behind the scenes story of Vodafone, Idea mega merger","synopsis":"The mega merger deal was completed after intense negotiations during a series of meetings in Mumbai, London and Abu Dhabi since January.","titleseo":"telecomnews\/the-behind-the-scenes-story-of-vodafone-idea-mega-merger","status":"ACTIVE","authors":[{"author_name":"Arijit Barman","author_link":"\/author\/16028\/arijit-barman","author_image":"https:\/\/etimg.etb2bimg.com\/authorthumb\/16028.cms?width=100&height=100","author_additional":{"thumbsize":true,"msid":16028,"author_name":"Arijit Barman","author_seo_name":"arijit-barman","designation":"Journalist","agency":false}},{"author_name":"Kalyan Parbat","author_link":"\/author\/4437\/kalyan-parbat","author_image":"https:\/\/etimg.etb2bimg.com\/authorthumb\/4437.cms?width=100&height=100","author_additional":{"thumbsize":true,"msid":4437,"author_name":"Kalyan Parbat","author_seo_name":"kalyan-parbat","designation":"Assistant Telecom Editor at the Level of Senior Assistant Editor","agency":false}},{"author_name":"Deepali Gupta","author_link":"\/author\/479219003\/deepali-gupta","author_image":"https:\/\/etimg.etb2bimg.com\/authorthumb\/479219003.cms?width=100&height=100","author_additional":{"thumbsize":false,"msid":479219003,"author_name":"Deepali Gupta","author_seo_name":"deepali-gupta","designation":"Journalist","agency":false}}],"Alttitle":{"minfo":""},"artag":"ET Bureau","artdate":"2017-03-21 08:40:11","lastupd":"2017-03-21 08:42:47","breadcrumbTags":["voda-idea","Vodafone","Reliance Jio Infocomm Limited","Videocon","industry","idea","rights","Reliance communications","due diligence","Reliance Jio"],"secinfo":{"seolocation":"telecomnews\/the-behind-the-scenes-story-of-vodafone-idea-mega-merger"}}" data-authors="[" arijit barman","kalyan parbat","deepali gupta"]" data-category-name="" data-category_id="" data-date="2017-03-21" data-index="article_1">
Sushil Agarwal,集团首席财务官和贝拉Kumar的参谋,连同Saurabh Agarwal,投资银行rainmakerturned-Birla战略的头,和Ashish Adukia,前银行家也改变了条纹加入集团的企业融资和并购,从孟买飞往伦敦沃达丰(Vodafone)集团总部启动合并对话,去年夏天被播种却逐渐消失。
桌子的另一边等着他们是另一个经验丰富的银行家——皮埃尔Klotz前汇丰银行和瑞银资深并购负责人的世界第二大电信公司,连同他的团队。
之前双方知道的谈判将是紧张结果能够达到即使竞争的动力行业变化的速度比任何人曾经预见。“母亲的的想法“可能挽救。
自从穆凯什•安巴尼依赖JioInfocomm冲进市场,去年9月免费的语音和数据服务和破坏了行业收入,唯一的出路是加入军队和巩固。
安尼尔•安巴尼的信实电信已经联手Aircel和之间的联盟国家的2号球员,沃达丰(Vodafone)和第三大的想法似乎唯一合理的出路。
“尽管沃达丰和想法在2016年调情,会谈实际上在今年年初严重,”一位官员说知道。
所以正确的交易结构是绝对必要的。”
这两家公司,自行探索收购或合并等较小的业务或资产从挪威的Telenor或频谱Videocon,但这些会谈没有结果实。在任何情况下,这些都是微不足道的操作;需要的是宏伟的。
等多个官员说,顾问和律师两边拼凑的故事220亿美元的婚姻。没有人愿意说话。
婚姻平等的
从来都不容易,当你试图比AT&T的结合并创建一个操作。更是如此,当一个比另一个。最粗略估算沃达丰印度估计价值30亿美元以上想法,包括债务。
双方也有条件让他们自己的交易value-accretive股东。首先,它必须与平等的合并权利。
在合并后的实体圈子想要一个最低26%,贝拉Kumar的主席。沃达丰也想deconsolidate其印度业务。已经投入超过300亿美元在印度自2007年以来,其经验是岩石,手脚回顾税收费用和冲销。这也是玩弄的首次公开发行(IPO)其印度业务,所以挑选正确的策略在印度这样的市场增长绝对是至关重要的。
最初的计划是合并两个无线操作,喜欢和Aircel RCom,但这不是实际和被拒绝了。
50:50的合资企业工作,只有有意义如果沃达丰保持印度塔从这笔交易中42%的股份,而思想的独立的塔楼和11%股权在印度河纳入合并后的实体。都希望减少接触塔资产,包括独立出售合资企业的股权,并表示他们仍计划之前合并得到完成。”构建了时间和后4 - 5天的孟买和伦敦之间激烈的头脑风暴。
但是一旦解决,其余落入地方很快。的意图很明显,如果一个人必须满足所有的先决条件,没有太多的选择首先,”另一名官员补充说。“两个操作也有价值相同的多个。“金融两者之间的差距一直在缩小在过去的几个月里。“只有10%的差距在息税前利润(利息、税项、折旧及摊销前利润)和沃达丰之间的想法。
的两个,想法一直增长速度及其利润率也明显改善。所以它并不那么艰难,”另一位高管回忆道。
点我的,T
但它是很难保持一切保密。
媒体泄露在英国和印度在1月中旬迫使双方进行月底发表联合声明,承认正在进行的谈判。
就在那时,情节增厚的“非常激进的时间表”。孟买之间、伦敦、迪拜和阿布扎比,核心团队遇到了超过半打次缝合起来。
“你有双方的内部经验丰富的银行家。留给他们点我和交叉t的基础设施和人力复制,等等。
皮埃尔和Saurabh已经经验丰富的银行家和电信曾在几个这样的交易十分清楚部门的问题。Adukia太对并购并不陌生,”一位资深律师表示参与讨论。
“难怪,圈子外没有参与任何银行家。沃达丰总是大多数最初的内部工作,只有得到顾问。这个也不例外。”
一旦整体构造商定,双方进行外部顾问——摩根士丹利(Morgan Stanley)、瑞银(UBS),罗比Warshaw Bank of America Merrill Lynch),科塔克罗斯柴尔德投资银行和;律师识别Associates Slaugter和可能开始工作文档。从2月,来自电信运营商的运营团队和说服尽职调查开始了。
“在合并,最敏感的是人类的问题。有冗余,脆弱的自我。所以你需要涉及到他们在正确的时间。
同样重要的是涉及到正确的家伙,”另一位高管回忆道。
操作上,双方已经繁忙的股票。3月15日,沃达丰印度黄铜在会见Vivek Badrinath朝拜首席执行官(译者注:挪威首都)基地和沃达丰集团的执行委员会成员,审核状态的防备和其他操作问题关于集成。第二天,沃达丰董事会在印度孟买进一步讨论合并。
倒计时
沃达丰首席执行官维托里奥·科劳组和克洛茨在3月18日晚飞。
“过去48小时狂热,”一位高管打趣地说。“谈判继续直到3在早晨。“周日早上,科劳贝拉和他的团队遇到了和他的交易团队在他们的最高总部来解决最终的轮廓。
尚待解决的一个关键问题是命名首席执行官、首席运营官和首席财务官。
他们终于同意托马斯•Reistien CFO沃达丰印度,将继续在他的角色Balesh Sharma,沃达丰印度的新任命的首席运营官。至于首席执行官,他们都同意的候选人,但选择不公布姓名。许多高级官员即将退休,使其更容易管理重叠。
正如一位官员所说:“我们没有留下任何最后一分钟的机会,但仍有讨论剧本……沟通员工、投资者、员工。”会议上滚到晚上,贝拉也立即满足和简短一些董事会成员。
的,周一早上的想法董事会会议和对话是一件轻而易举的事。超级联盟的电波届时准备好面对这个世界。
MUMBAI | KOLKATA: The whole world may have been slower than molasses in early January, still hungover from New Year celebrations, save for the trio at Aditya Birla Centre, the headquarters of the AB Group.
\n
Sushil Agarwal, group CFO and Kumar Birla’s consigliere, along with Saurabh Agarwal, investment banking rainmakerturned-Birla’s strategy head, and Ashish Adukia, also a former banker who changed stripes to join the conglomerate as its corporate finance and M&A head, flew from Mumbai to London to the Vodafone<\/a> Group headquarters to kickstart a merger conversation that was seeded last summer but had petered out.
\n
\nWaiting for them on the other side of the table was another seasoned banker — Pierre Klotz, a former HSBC and UBS veteran who heads M&A at the world’s second-largest telecom company, along with his team.
\n
Both sides knew the negotiations would be intense before a result could be achieved even as the dynamics of the competitive industry<\/a> were changing faster than anyone had ever foreseen. Only a “mother of an idea<\/a>” could have salvaged the day.
\n
\n
\n
\n
Ever since Mukesh Ambani’s Reliance Jio<\/a> Infocomm stormed the market with free voice and data services last September and undermined industry revenue, the only way out was to join forces and consolidate.
\n
Anil Ambani’s Reliance Communications<\/a> had already teamed up with Aircel and an alliance between the country’s No. 2 player, Vodafone, and the third-largest, Idea<\/a>, seemed the only logical way out.
\n
\n“Though Vodafone and Idea had flirted in 2016, the talks actually turned serious around the beginning of this year,” said an official in the know.
\n
\n“So getting the deal construct right was absolutely essential this time around.”
\n
Both companies had, on their own, explored buying or merging smaller operations or assets like spectrum from Norway’s Telenor or Videocon<\/a>, but those talks never fructified. In any case, these were puny operations; what was needed was grandiose.
\n
\nET spoke to multiple officials, advisers and lawyers from both sides to piece together the story of the $22-billion marriage. Nobody wanted to speak on record.
\n
\nMARRIAGE OF EQUALS<\/strong>
\nIt’s never easy when you are trying to combine and create an operation bigger than AT&T’s. More so, when one is bigger than the other. Most back-of-the-envelope calculations had estimated Vodafone India to be worth $3 billion more than Idea, including debt.
\n
Both sides also had their conditions to make the deal value-accretive for their own set of shareholders. To begin with, it had to be a merger with equal rights<\/a>.
\n
\nBirlas wanted a minimum 26% in the combined entity and a chairmanship for Kumar Birla. Vodafone too wanted to deconsolidate its Indian operations. Having invested over $30 billion in India since 2007, its experience has been rocky, hamstrung with retrospective tax charges and write-offs. It was also toying with an initial public offering (IPO) for its India operations, so cherry-picking the right strategy to grow in a market like India was absolutely critical.
\n
\nThe initial plan was to merge the two wireless operations, like RCom and Aircel, but it wasn’t practical and was rejected.
\nTo make the 50:50 JV work, it only made sense if Vodafone kept its 42% stake in Indus Towers out of the deal while Idea’s standalone towers and 11% shareholding in Indus were brought into the combined entity. Both have been looking to reduce exposure to tower assets, including selling stakes in the joint venture independently, and have said they still plan to do so before the merger gets consummated. “The construct took time and followed 4-5 days of intense brainstorming between Mumbai and London.
\n
\nBut once that was settled, the rest fell into place quickly. The intent was very clear and if one had to meet all the pre-conditions, there were not too many choices available in the first place,” added another official. “Both the operations also got valued at the same multiple.” The financial gap between the two has been shrinking in the past few months. “There is only a 10% gap in EBITDA (earnings before interest, tax, depreciation and amortisation) between Idea and Vodafone.
\n
\nOf the two, Idea has been growing faster and its margins have also improved significantly. So it wasn’t all that tough,” recalled another executive.
\n
\nDOT THE I’S, CROSS THE T’S <\/strong>
\nBut it was tough to keep everything under wraps.
\nMedia leaks in the UK and India in mid-January had forced both sides to make a joint statement by the end of the month, acknowledging the ongoing talks.
\n
\nIt was then that the plot thickened on the back of “really aggressive timelines”. Between Mumbai, London, Dubai and Abu Dhabi, the core team met a little over half a dozen times to stitch it all up.
\n
\n“You have seasoned in-house bankers on both sides. It was left to them to dot the i’s and cross the t’s like infrastructure and manpower duplication, among other things.
\n
\nBoth Pierre and Saurabh have been seasoned telecom bankers and having worked on several such transactions are fully aware of the sectoral issues. Adukia too is no stranger to M&As,” said a senior lawyer privy to the discussions.
\n
\n“No wonder, Birlas did not engage any outside bankers. Vodafone always does most of the initial work in-house and only then gets advisers on board. This was no exception.”
\n
Once the overall construct was agreed upon, both sides engaged external advisers — Morgan Stanley, UBS, Robey Warshaw, Bank of America Merrill Lynch, Kotak Investment Bank and Rothschild; lawyers S&R Associates, Slaugter and May — to begin work on documentation. From February, the operations team from both the telcos were roped in and due diligence<\/a> began.
\n“In a merger, human issues are the most sensitive. There are redundancies, frail egos. So you need to involve them at the right time.
\n
\nIt’s equally important to involve the right guys,” recalled another executive.
\n
\nOperationally, both sides had already been busy taking stock. On March 15, the Vodafone India brass met along with Vivek Badrinath, CEO (AMAP) and executive committee member of Vodafone Group, to review the state of preparedness and other operational issues with regard to the integration. The following day, the Vodafone India board met in Mumbai to further discuss the merger.
\n
\nFINAL COUNTDOWN<\/strong>
\nVodafone Group CEO Vittorio Colao and Klotz flew in on the evening of March 18.
\n
\n“The past 48 hours have been frenetic,” quipped an executive. “Negotiations went on till 3 in the morning.” On Sunday morning, Colao and his team met with Birla and his deal team at their Worli headquarters to iron out the final contours.
\n
\nA key issue still to be sorted out was naming the CEO, COO and the CFO.
\n
\nThey finally agreed that Thomas Reistien, CFO of Vodafone India, would continue in his role as would Balesh Sharma, Vodafone India’s newly appointed COO. As for the CEO, they both agreed on a candidate but chose not to announce the name as yet. Many senior Idea officials are on the verge of retirement, making it easier to manage the overlaps.
\n
\nAs an official put it: “We didn’t leave anything to chance for the last minute, but still had to discuss the script... the communication to employees, investors, employees.” As the meeting rolled on till evening, Birla also had to immediately meet and brief some of the board members.
\n
\nWith that out of the way, the Monday morning Idea board meeting and the townhalls were a cakewalk. The mega alliance of the airwaves was by then ready to face the world.
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