RIL: Anil can't do RCom-MTN deal

War has again broken out between the Ambani brothers. On Thursday, Reliance Industries (RIL), controlled by Mukesh Ambani, sent a bolt from the blue to South African telecom giant MTN, which is in talks with Anil Ambani's Reliance Communications for a mergeracquisition: Not so fast, there are family settlement issues involved before you can move any which way. The missive became public late on Friday.

The salvo threatens to put a spanner in the works of what is billed as the largest merger or acquisition deal in the making by an Indian company.
In a convoluted share-swap agreement, Anil was supposed to part with a portion of his stake in RCom for a slightly less than 35% stake in the merged RCom-MTN entity.
However, MTN said "nothing has changed, talks continue."
"As far as MTN is concerned nothing has changed. We are continuing with our dialogue," MTN spokesperson Nozipho-Bardill told PTI over phone from Johannesburg. Asked if RIL's communication to MTN claiming first right of refusal to buy the controlling stake in RCom would have any bearing on talks, she said "we are in the middle of talks...nothing has changed."
A statement from RIL said, "RIL has in good faith notified the Reliance ADAG group and the MTN group of the stipulations contained in an agreement, the validity of which has never been questioned so far by Reliance ADAG."
The RIL stand appears to be that the Ambanis' secret document on ownership settlement offers a right of first refusal, implying RCom may have to be offered to Mukesh before being sold to anyone else.
The family settlement was signed in August 2005 after a raging battle fought in the boardroom and in the public domain by the two brothers.
The ownership settlement clearly demarcated the businesses between the two brothers.
Mukesh gave away to Anil the telecom business he built from scratch and kept the lucrative petroleum and petrochemical business.
An RIL spokesperson declined to comment. But the Reliance ADA group, a three-year old business house, was quick with a riposte.
"RIL is seeking to disrupt the creation of one of the world's most valuable telecoms combinations, which will make over a billion Indians proud of our great country," an ADAG spokesperson said.
"RIL's actions are clearly anti-consumer, anti-investor and anti-globalisation, and against the vision, beliefs and principles of the founder of the Reliance Group, late Dhirubhai Ambani. Reliance Communications dismisses RIL's claim with the contempt it deserves," an RCom statement added.
The Anil Ambani group alleged: "Last night, in a mala fide effort to disrupt the talks, 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 RCom.
Not surprisingly, RIL has sent the letter to RCOM only today i.e. after a gap of 24 hours."
RCom was served the copy of the letter sent to MTN on Thursday as late as 5.30 pm, on Friday.
For Anil, there is a lot at stake in the MTN deal.
If MTN and RCom join hands and Anil becomes the principal promoter of the merged group, it would mean that his telecom network will straddle the Earth from the Cape of Good Hope to the Himalayas.
A possible merger will also create a telecom giant with a subscriber roster of over 100 million customers, on two continents which promise a lot of scope for growth.
It remains to be seen whether the RIL missive will hamper merger acquisition talks, although RCom officials claimed it will have no effect.
"MTN knows. The discussions are ongoing. RIL's claim is legally and factually untenable, baseless, and misconceived," the RCom official said.
But an analyst said any seller will be afraid of a litigation. Sources said MTN is expected to go on a conference call to update investors on the developments.
According to RCom, RIL has based its claim on an agreement of January 12, 2006, which was unilaterally signed only by RIL's officials when RCom was under RIL's control, under a procedure which the Bombay High Court, vide its judgment dated 15th October 2006, has held to be "unfair and unjust."
RIL's claim is born out of 'mounting despair and frustration' at Reliance ADA Group's continuing successes, RCom officials claimed.
Reliance Communications had informed the stock exchanges on May 26, 2008, that it has entered into exclusive negotiations with MTN Group for a period of 45 days, for a potential combination of their businesses.

If you don't like reliance stock just sell it : Mukesh Ambani

MUMBAI: "IF you don’t like Reliance stock, sell it," an irate Mukesh Ambani told a shareholder pestering him about bonus shares at Thursday’s AGM. The shareholder argued that Mr Ambani is spending Rs 8,000 crore in building the world’s costliest house, another Rs 600 crore to gift an aircraft to his wife and when it comes to rewarding the shareholders through bonus issue, he turns a miser. Mr Ambani tried to pacify him but the shareholder warned Mr Ambani. The shareholder also alleged that Mr Ambani did not stick to his words and has not awarded a bonus despite having promised one in the past few AGMs. This further angered Ambani and he banged on the dais saying: “Don’t lie at a corporate AGM. This is not a political meeting. The proceedings of every year AGM is recorded and I never promised any bonus issue. It is a decision to be taken by the RIL board. Corporates mein aisa hi chalta hai... ” (This is the way corporates function).
Earlier while addressing the shareholders, Mr Ambani said: “All our businesses have delivered outstanding results and all shareholders have benefited significantly. Over the last five years, the market capitalisation has grown by 54% compounded per annum. This is a glowing assertion of our commitment to shareholder value creation. We have increased our dividend payout to 130%, amounting to Rs 1,631 crore.” Mukesh Ambani is against the idea of imposing windfall taxes on private refiners, reports Piyush Pandeyfrom Mumbai. Answering shareholders query at RIL’s 34th AGM, Mr. Ambani said: “We are governed by the production sharing contract (PSC). The higher the price of crude, the more government gets in form of profit petroleum. Besides all price increase also goes back to the government embedded in tax.” This was in response to worried shareholders who are concerned with the windfall taxes being imposed on RIL for spiralling global crude oil prices. At least half-a-dozen shareholders asked about the issue of windfall taxes being imposed on RIL as in the US. Left parties in India are demanding a tax on the windfall profits of private refiners to make up for the losses by the PSU oil firms for selling below cost price. A recent research report said: “With the subsidy problem getting bad, highly profitable private oil firms are being taxed to fund the subsidy bill cannot be ruled out.”