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The merger talks of Anil Ambani’s flagship company, Reliance Communications (RCom) with the MTN Group of South Africa, which is a major multinational mobile telecommunications company, could be in trouble. The enmity between the Ambani brothers – Anil and Mukesh – has resurfaced once again. This time the row revolves around elder brother Mukesh’s company Reliance Industries Ltd. (RIL) claim for first right to the younger Ambani’s stake in Reliance Comm in case of equity swap with MTN.
As such, Anil Ambani’s Reliance Comm in a recent statement issued remarked, ‘Last night, in a mala fide effort to disrupt the talks, Reliance Industries Ltd (RIL), part of the Mukesh Ambani group, has sent a communication to MTN Group, making a false claim of an alleged right of first refusal to buy the controlling stake in Reliance Communications Ltd (RCom). RIL’s claim is legally and factually untenable, baseless, and misconceived.’ It is now been about the month since the possible merger talks between Reliance Comm and South Africa’s MTN started.
As per the their negotiations being worked out, the South African firm will acquire about 60 per cent stake in Reliance Comm, whereas Mr Anil Ambani may acquire around 35 per cent stake in MTN. As per a source who is well acquainted with both the Ambani families, the two sides had conceded that the other brother will enjoy the first right of refusal when it involves a significant stake in any of the businesses owned by either of the brothers. However the claim of RIL has been refuted by R Comm.
Sources from Anil Ambani’s company have underscored that RIL’s claim is based on a June 12, 2006 agreement that was inked unilaterally only by RIL when Reliance Com was still under its management under a procedure which the Bombay High Court, vide its judgement dated October 15, 2006, has held to be ‘unfair and unjust’. Sources from Reliance communication also added that RIL’s claim is accruing from increasing despair at Anil Ambani’s company doing so well. Reliance Communication in a sharply worded letter has replied that in case RIL pursues a legal suit, RComm will vigorously defend itself and claim legal damages.
