SPICE

COMMUNICATIONS –
IDEA CELLULAR MERGER
__________________________

A CASE STUDY
 BY
PARIJAT SAURAV
V BBA LL.B.
SLS, PUNE
IDEA CELLULAR LIMITED (IDEA)
INTRODUCTION:
 A leading GSM mobile services operator.
Idea Cellular is a part of the $ 30 billion Aditya Birla
Group, a multinational corporation of India.
 Idea is listed on the National Stock Exchange (NSE)
and the Bombay Stock Exchange (BSE) in India.
 Idea operates in around 20 countries.
 In India, Idea holds Pan-India License.
SPICE COMMUNICATIONS LIMITED (SPICE)
Spice was incorporated as Modicom Network Private
Limited on 28 March 1995 as a private limited
company.
Spice subsequently became a deemed public company
under Section 43(1A) of the Companies Act, 1956 of
India with effect from 1 April 1999 and its name was
changed to Modicom Network Limited.
Spice assumed its present name via a fresh Certificate
of Incorporation dated 3 December 1999.
With the addition of the word ‘Private’ in Spice’s name
under Section 43(2A) of the Companies Amendment
Act, 2000 of India, Spice’s name was changed to Spice
Communications Private Limited with effect from 28
October 2003.
On 28 December 2006, Spice was converted into a
public limited company and assumed its present name.
At the time of the announcement of the merger, Spice
offered mobile telecommunication services in the
Punjab and Karnataka states of India.
As of 30 April 2008, Spice had 4.4 million subscribers
representing a 1.7% market share in India.
Spice was listed on the Bombay Stock Exchange
Limited on 19 July 2007, and on the National Stock
Exchange of India Limited on 16 June 2008.
TELEKOM MALAYSIA INTERNATIONAL (TMI)
Listed on Bursa Malaysia, TMI is among the top ten
biggest public listed companies in Malaysia by market
capitalization.
It is the first listed pan-Asian pure cellular service
provider in the region.
At the time of announcement, TMI, including
subsidiaries and associates, had over 44 million mobile
subscribers in Asia, putting it among the largest
mobile telecommunication providers in the region by
turnover.
MERGER
Merger is defined as fusion of two or more existing
companies.

One survives and the others lose their corporate

existence.

The survivor acquires all the assets as well as liabilities

of the merged company or companies
THE DEAL
The deal was announced on 25th June 2008 by a press
release by the Aditya Birla Group.

Idea to acquire the Spice Group stake of 40.8% in

Spice Communications Limited (‘Spice’) at a price of
Rs 77.30 per share at a premium of 40%. The stake is
valued at Rs 2,175 crores.

Idea will also make a payment of approximately Rs 544

crores to the Spice Group as non-compete fee.
Idea and TM International (‘TMI’) along with their
affiliates and associates (as persons acting in concert),
will make an Open Offer for an additional 20% stake
in Spice.

The Open Offer will be made at a price of Rs 77.30 per

share.

The swap ratio was determined at 49 shares of Idea for

every 100 shares of Spice.
GAINS FOR EACH ENTITY
The new entity would form the fourth largest GSM
telco after Bharti, Vodafone and BSNL with a total of
14.43% market share. 

The shares of both the merging entities were values at

premium. The shares of Spice were valued at Rs. 77.30
per share (40% premium) whereas the shares of Idea
was valued at Rs. 156.96 per share (58% premium).

Spice to become Pan Indian operator.

Idea to operator in two more circles (Punjab and
Karnataka) and an addition of 4.4 million subscribers.

TMI to get share in the shareholding pattern of Idea

(estimates at 14.99%) which may give TMI more
penetration in Indian Telecom Market.

Open offer of 20% to Shareholders of Spice.

SHAREHOLDING PATTERN OF SPICE
BEFORE MERGER

20%
SPICE
COMMUNICATIONS
41% LIMITED (40.80%)
TMI INDIA LIMITED
(39.20%)
OTHERS (20.00%)

39%
SHAREHOLDING PATTERN OF SPICE
AFTER MERGER
1%
9%
IDEA CELLULAR
LIMITED (41.09%)
TMI INDIA LIMITED
41% (49.00%)
GREEN ACRE AGRO
SERVICES P. LTD.
(8.80%
OTHERS (1.11%)
49%
SHAREHOLDING PATTERN OF IDEA
PRE MERGER

32%
ADITYA BIRLA NUVO
LTD. (31.78%)
BIRLA TMT HOLDING
P. LTD. (10.76%)
57% TMI (0.00%)
OTHERS (57.46%)
11%
SHAREHOLDING PATTERN OF IDEA
POST MERGER

27%
ADITYA BIRLA NUVO
LTD. (27.02%)
49% BIRLA TMT HOLDING
P. LTD. (9.15%)
TMI (14.99%)
9% OTHERS (48.84%)
15%
PROCEDURE IN THE MERGER
The Board of Directors of the Target Company (SPICE) at its
meeting held on June 25, 2008 approved the scheme of
amalgamation (merger) with Idea. The same was intimated to
the sock exchanges where the shares of the target company
(SPICE) were listed.

The deal was announced by a press release by the Aditya Birla

Group on the same date.

Application u/S. 391/394 was moved by the parties in the Hon’ble

Delhi High Court and the Hon'ble High Court of Gujarat at
Ahmedabad
On June 30, 2008, The Acquirer (IDEA) and the PAC
made public announcement/open offer to acquirer up
to 137,985,050 equity share ("Shares") of the face value
of Rs.10 each, representing in aggregate 20% of the
paid-up equity share capital of Target Company (Spice
Communications Limited) in terms of provisions of
the SEBI (SAST) Regulations, 1997 at a price of
Rs.77.30 per share (Rupees Seventy seven and thirty
paise only).
The existing Shareholders Agreement dated 10th March,
2006 between the existing shareholders was Terminated
pursuant to the termination agreement dated 25th June
2008.

On 7th July, 2008, the Acquirer (IDEA) acquired the

shares of the target company (SPICE). Pursuant to the
acquisition and abiding by the provisions of the Takeover
Code, the Acquirer and the target company made the
requisite disclosure to the stock exchanges where the
shares of the target company were listed.
The Public Offer closed on October 6, 2008 and the
shareholders were paid the consideration on October
15, 2008 as per the Regulations of the Takeover Code.

Idea Cellular Limited (Idea) together with its associate

namely Green Acres Agro Services Pvt. Ltd., currently
holds 49.9% equity in Spice Communications Limited
(Spice). The other major shareholder in Spice is TMI
India Limited which holds around 49.0% equity. The
balance around 1.1% is held by public.
Spice Communications Limited convened and held the
Equity Shareholders, Secured Creditors and Unsecured
Creditors meeting(s) pursuant to the directions of the
Hon'ble High Court of New Delhi on the September 11,
2009. The Equity shareholders, Secured and Unsecured
Creditors of the Company duly approved the scheme of
amalgamation of Spice Communications Limited with
Idea Cellular Limited. The said scheme of amalgamation
was approved by the Equity Shareholders of the Company
with requisite majority and unanimously by the Secured
Creditors and Unsecured Creditors of the Company.
The Hon'ble High Court of Delhi at New Delhi and
Hon'ble High Court of Gujarat at Ahmedabad
sanctioned the Scheme of Amalgamation of Spice
Communications Limited with Idea Cellular Limited
u/s 391 to 394 of the Companies Act, 1956 in February
2010.
Pursuant to the sanction of the scheme of
amalgamation by the two High Courts, the Board of
Directors of Idea have fixed March 12, 2010 as the
'Record Date' for the purpose of drawing up the list of
shareholders of Spice to whom Equity Shares in Idea
are to be issued and allotted pursuant to the said
Scheme. The Court Orders have been filed in the
respective offices of the Registrar of Companies and
the Scheme became effective on March 01, 2010.
In accordance with the Scheme, the Equity
Shareholders of Spice (Transferor Company) as on the
Record Date i.e. March 12, 2010, were issued and
allotted Equity Shares in the ratio of 49 (Forty Nine)
Equity Shares of Rs.10/- each fully paid-up of Idea
(Transferee Company) for every 100 (One Hundred)
Equity Shares of Rs.10/- each held in Spice. Further,
Idea Cellular Limited has submitted to the Stock
Exchanges, note on the said Scheme of Amalgamation.
THANK YOU