Ambani vs. Ambani – Mukesh Ambani wants to buy ADAG’s flagship company, Rcom

The MTN saga is getting longer and longer and the deal is just not getting through. Earlier, Bharti – MTN deal was ruled out due to deviation of MTN from ‘in – principle’ agreement which is highly unethical for a conglomerate of such magnitude. And now, all of a sudden, Mukesh Ambani has jumped into the fray claiming that RIL has got the first right of refusal if RCOM wants to sell its majority stake in the company.

The Rcom – MTN deal which was likely to sealed off soon has now taken a new turn as RIL sent a letter to MTN saying that RIL has the first right to buy shares of Rcom in case they are willing to sell stake. The letter was sent to MTN on last Thursday and simultaneously Rcom was intimated of the same on Friday. Mukesh Ambani claims that it is the duty of RIL to ensure that the price at which Rcom is selling off shares to MTN is appropriate. Furthermore, he is of the view that most of the Rcom’s shareholders are originally RIL’s shareholder and it is the duty of RIL to protect them. RIL also claims that as per the non - compete agreement which was unilaterally agreed upon by RIL in Jan 2006, RIL has the first right to refusal in case the group decides to sell off any business.

On the other hand, ADAG has reacted very aggressively on the claim of RIL calling it, “legally and factually untenable, baseless and misconceived.” ADAG is of the view that Bombay high court has ruled the agreement as invalid and also that it was not a bilateral agreement and was agreed upon only by RIL.

In a press statement, RCOM said: “RIL’s claim is born out of mounting despair and frustration at the Anil Ambani group’s continuing success and the support it enjoys from over 10 million investors. RIL is seeking to disrupt the creation of one of the world’s most valuable telecom combinations which will make over a billion Indians proud. RIL’s actions are clearly anticonsumer, anti-investor and anti-globalisation, and against the vision, beliefs and principles of the founder of the group, late Dhirubhai Ambani.”

As per the sources, MTN remains committed to their plans of value unlocking by entering into the deal with Rcom. But the recent twist to the story by Mukesh Ambani, can be a major setback in the way of Rcom’s growth plans which is looking forward to enter into a landmark deal not only for the company but also for India. If the deal goes through, Rcom will emerge as the single largest shareholder in MTN and simultaneously, it will become a subsidiary of MTN. This will create a telecom company with 115 million subscribers across 23 countries in Asia, South Africa and the Middle East.

The fight between Ambani brothers is not new for the spectators and both the brothers have agreed to disagree on expansion plans of each other. There had been instances in the past when both of them have filed cases against each other. It feels bad to see brothers fighting among themselves but when Pandavas and kauravas could not rule out such fight for power and fame, Ambanis’ can not be an exception. At the end of the day, it hardly matters to the stakeholders as Finance Minister, P Chidambaran once said –

“Who cares if the brothers are fighting, the markets are growing because the two are trying to outdo each other.”

(The views expressed are personal. For any queries, you may write to amitkhandelia@yahoo.co.in)
Source: aiii