Essar Demands $700M From Vodafone For Stake

Essar Group is now asking UK based Vodafone for $600-700 million more for complete control of Vodafone Essar, one of the top cellular service providers in the country, Economic Times reported.

This deal would bring Vodafone's stake up from 67% to 78%.

In March, Vodafone announced it would pay $5 billion to buy out Essar Group's stake in Vodafone Essar and the settlement would be finalised by November 2011. According to the agreement, Essar Group could sell its stake to Vodafone for $5 billion till May 2011 but the company appears to have decided it is not enough.

Now the Essar group is arguing that since the 11% held in India is being bought by Vodafone it is subject to Reserve Bank regulations. "We are mindful of the new Reserve Bank of India guidelines and fully expect the current transaction to comply with them," Vodafone group spokesman Simon Gordon has reportedly said.

Essar's 11% stake in Vodafone Essar is worth $1.8-1.9 billion, compared with the purchase option that pegs it at $1.2 billion, said The Economic Times report.