Via findingcents.blogspot.com/:
In the bidding war for Hutchison Essar, a leading cellular provider in India, Vodafone (VOD) has come out victorious. The terms of the deal were announced today, as Vodafone secured a 67% stake in the cellular provider for $11.1 billion. The deal ultimately values the cellular provider at $18.8 billion, including debt, which lands the final value in middle of the $16-20 million range analysts were expecting. Sources such as Bloomberg and the Wall Street journal have expressed skepticism, saying the price may be too high but the market has reacted positively, sending the shares up over 2% in early trading today. Investors should be cautious though, as Vodafone's CEO, Arun Sarin, has said the deal will add to their earnings five years after completion (Bloomberg.com). Also, it will take four Indian cellphone users to generate the revenue that one European customer brings in. That said, operating margins in for Hutchison Essar have been higher than Vodafone's and the rapid growth should provide the volume necessary to offset the four - to - one ratio.
$29.52 (02/13/07)
