$23bn merger between Vodafone and Idea clears another regulatory hurdle
Sebi, India's securities watchdog, has given the thumbs-up to Vodafone India's proposed merger with Idea Cellular
The proposed merger between Vodafone India and Idea Cellular has taken a step nearer to completion after it was given conditional approval by the Securities and Exchange Board of India (Sebi).
The $23 billion merger will create a new mobile leader in the Indian market, with the two firms’ now just needing approval from shareholders and the National Company Law Tribunal (NCTL).
The deal has already been rubber-stamped by trade regulator CCI, but additional, albeit conditional, approval from Sebi brings it a step closer. In a no-objection letter on the scheme of arrangement between Vodafone, Idea, their shareholders and creditors, Sebi said all its conditions must be placed before the NCLT while seeking the latter’s approval.
Those conditions included a voluntary undertaking by Idea that it will not dispose of shares that were purchased by one of its promoters before the merger announcement, until it receives further directions from Sebi.
Idea has already submitted its application for approval from NCTL. In a statement, it said: “Idea Cellular yesterday filed an application before the National Company Law Tribunal, Ahmedabad bench, for approval of the merger of Vodafone India Ltd and Vodafone Mobile Services Ltd with the company.”
The deal comes as Vodafone and Idea – currently second and third in the Indian market respectively – have found themselves under increasing pressure due to the entrance of Reliance Jio last year. Jio’s free services offer has cut into revenues at its rivals, forcing a spate of M&A activity in India, although the Vodafone-Idea merger would be the largest.