20 March 2017 Current Affairs: Idea Cellular, owned by Kumar Mangalam Birla, on 20 March 2017 announced that its board has approved the merger of Vodafone India and its wholly-owned subsidiary Vodafone Mobile Services Limited with itself.
This merger will lead to the creation of the country's largest telecom entity with about 400 million customers.
The merger will also help the company in holding 35 per cent market share as well as 41 per cent revenue market share.
Highlights of the merger : Vodafone will hold 45.1 per cent in the combined entity.
Idea promoters will hold 26.1 per cent of the entity.
Aditya Birla Group will have right to buy 9.5 per cent stake in the new entity.
Under the terms of the agreement, the merger should be completed within 24 months. Idea will have the sole right to appoint the chairman.
Vodafone has right to appoint CFO of the company.
On the other hand, the appointment of CEO and COO will require an approval of both the companies.
The entity or the combined entity will be jointly controlled by Aditya Birla Group and Vodafone.
Vodafone will deconsolidate Vodafone India immediately.
As per reports, Kumarmangalam Birla will be the Chairman of merged Vodafone-Idea entity. In addition to this, both companies will have equal stakes in the merged entity over a period of time.
Idea Cellular in a statement said, "Upon the amalgamation of becoming effective, the entire business of VIL and VMSL (excluding VIL's investment in Indus Towers) will vest in the company”.
The board of the combined entity will have 12 directors including 3 directors appointed by each of Aditya Birla Group and Vodafone. Promoters of the two firms will have the right to nominate 3 directors each.
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