Vodafone has announced that Indian pharmaceutical company, Piramal Healthcare, has agreed to buy a minority share in Vodafone Essar for approximately $640 million.
Piramal has bought a 5.5% share in Vodafone Essar, in a deal clearly tailored to ensure the UK operator’s Indian business comply with foreign ownership rules. Indian authorities prevent foreign investors from owning over 74% of a business in the country and this sale will reduce Vodafone’s stake to 70%.
This latest announcement follows the settlement of Vodafone’s acquisition of Essar’s 33% stake in Vodafone Essar, which was announced at the beginning of July. Vodafone has been struggling with Indian telecoms and tax regulators since 2007 when it bought Hutchison Essar and was issued a tax bill of $2.5 billion.
The Financial Times reported that Piramal has been given the option to sell its Vodafone Essar stake back to Vodafone for $900 million after two years.
A spokesperson from Vodafone said: "This [deal] gives us flexibility for any potential future restructuring and specifically in the context of any potential IPO."
