Idea-Spice marriage to happen post IPO

Category: News | No Comments | Posted on June 5, 2007

ET reports that talks of merger or acquisition between Idea Cellular and Spice Telecom will continue only after Spice’s IPO.

A possible reason for this is that the listing will ensure a robust price discovery process for the company, which is currently believed to be valued at about $1 billion. Besides, any merger post-IPO will also ensure a cashless swap of equity.

Also, a group of investors led by Lehman Brothers and Spinnaker Investments have picked up a small stake in Spice Telecom for about $30 million, as part of the pre-IPO placements by the cellular service provider.

Spice is targeting an issue date of June 18 for its 600 crore IPO.

Spice will be offloading nearly 138 million shares, equivalent to 20% of its enlarged capital base. Following the IPO, the stakes of the Modis and Telekom Malaysia, which is currently at 51% and 49%, will fall by 10% each. This implies, post-IPO, the Modis will have about 41% while Telekom Malaysia 39%.

Spice currently has 2.8 million subscribers and has operations in two telecom circles – Karnataka and Punjab.

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