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  • Vodafone Piramal Healthcare Deal: By: Krishna K Akash Tyagi Vikas Marwaha

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    Vodafone, a global telecommunications company, sold a 5.5% equity stake in its Indian subsidiary Vodafone Essar Limited to Piramal Healthcare, India's second largest pharmaceutical company, for $640 million. Piramal has the option to sell the stake back to Vodafone or exit through an IPO. This deal provides Piramal an attractive investment opportunity with returns expected around 17%, while ensuring returns through a potential buyback or IPO. It also allows Piramal to diversify and invest its large cash reserves from previous pharmaceutical asset sales.

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    Vodafone Piramal Deal

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    Vodafone, a global telecommunications company, sold a 5.5% equity stake in its Indian subsidiary Vodafone Essar Limited to Piramal Healthcare, India's second largest pharmaceutical company, for $640 million. Piramal has the option to sell the stake back to Vodafone or exit through an IPO. This deal provides Piramal an attractive investment opportunity with returns expected around 17%, while ensuring returns through a potential buyback or IPO. It also allows Piramal to diversify and invest its large cash reserves from previous pharmaceutical asset sales.

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    29 views10 pages

    Vodafone Piramal Healthcare Deal: By: Krishna K Akash Tyagi Vikas Marwaha

    Uploaded by

    Vikas Marwaha
    Vodafone, a global telecommunications company, sold a 5.5% equity stake in its Indian subsidiary Vodafone Essar Limited to Piramal Healthcare, India's second largest pharmaceutical company, for $640 million. Piramal has the option to sell the stake back to Vodafone or exit through an IPO. This deal provides Piramal an attractive investment opportunity with returns expected around 17%, while ensuring returns through a potential buyback or IPO. It also allows Piramal to diversify and invest its large cash reserves from previous pharmaceutical asset sales.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
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    Download as pptx, pdf, or txt
    of 10

    Vodafone

    &

    Piramal Healthcare Deal

    By: Krishna K Akash Tyagi Vikas Marwaha

    Global telecommunications company headquartered in London. World's largest mobile telecommunications company measured by revenues Operates networks in over 30 countries

    India's second largest Pharmaceutical Healthcare Company. Presence in the cardio-vascular segment, the antibiotics and respiratory segments, pain management, neuro-psychiatry and antidiabetics segments and biotechnology. Currently having huge liquid cash in hand.

    In 2007, Vodafone acquired the controlling interest of 67% held by Li Ka Shing Holdings in Hutch-Essar for US$11.1 billion.

    In 2011, bought an additional 33% stake in its Indian joint venture from Essar for US$5.0 billion

    Sold 5.5% equity stake in Vodafone Essar Limited (VEL) to Piramal Health Care for US$460 millions

    Recently, Piramal HealthCare has acquired a 5.5 % stake in Vodafone for $640 million. Vodafone's Indian operations were valued at $11.6 billion (Rs52,500 crore). Piramal has the option to exit at the time of an initial public offering (IPO) by Vodafone. Alternatively, Piramal also has an option to sell the stake back to Vodafone Prediction is that Piramal will sell it back to Vodafone after 2 years.

    Vodafone-Essar and FDI regulation


    Confl icts Mar. 2011
    Over Essar Group plans to sell the holding in the mobilephone operator Vodafone announced plans to acquire stakes in Essar

    June
    2011

    Vodafone bought entire stakes of Essar for US$ 5 billions Vodafones stakes raised to 75.35 percent, marginally above the upper limit (74 %) for foreign holdings in the telecom Vodafone sold 5.5 % stakes to Piramal

    June 2011 Aug.


    2011

    Sold off its drug formulations to Abbott deal Piramal for $3.8 billion

    Huge amount of cash in hands

    Attractive Returns from investments- expected returns of 17 %.

    Returns Assurance: Either Piramal will get money from Vodafone or through IPO

    Legal FactorsFDI norms

    Timeliness of the Deal

    Possibility of IPO

    Attractive Investment Opportunity

    Associated Risks

    Future needs of Money

    For Vodafone
    Fighting a tax bill-can result in the tax payment of $2.5billion Boundation to pay an additional $260 million to reacquire the stakes sold to Piramal Depleted Reserves- Lower Profitability

    For Piramal
    Diversification process-can block the money for 2 years

    Sales

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