India’s Foreign Investment Promotion Board (FIPB) has twice delayed its approval of Vodafone buying Hutchison’s share in Hutchison Essar for $11 billion, and its looking less likely the deal will be approved as it is. “Although the Indian government in principle welcomes Vodafone, concern is mounting that the transaction would set a precedent that weakened foreign direct investment rules, which are restrictive in several industrial sectors,” reports the Financial Times. The problem is that in order to comply with the rules Vodafone will have 15 percent of the telco held in the hands of two Indians, a deal which replicates that which Hutchison had…which raises the question of why it is suddenly a problem. None of this would be a problem if Essar had all of its 33 percent stake in India, rather than keeping two thirds of it off-shore. Essar had claimed it had right of first refusal if Hutchison wanted to sell its stake, something Hutchison disputed as only applying to Indian companies. Essar appeared to capitulate, but…
Related stories:
—Vodafone’s Acquisition Of Hutch Deferred; Deal Under Regulatory Scanner
—Essar Bends Vodafone And Hutchison Over A Barrel
—Agreement Reached For Vodafone Essar