Tycoon shuns investment banks in US$23b Vodafone deal

[MUMBAI] Indian billionaire Kumar Mangalam Birla just pulled off the biggest deal of his career. There won't be any investment banks sharing in the glory.

The tycoon's mobile arm, Idea Cellular Ltd, said Monday it will merge with Vodafone Group Plc's Indian operations to create the largest Indian wireless carrier with a US$23 billion enterprise value. Mr Birla, who will be chairman of the combined business, personally led talks with Vodafone Chief Executive Officer Vittorio Colao, people with knowledge of the matter said. While Vodafone was assisted by a slate of six investment banks - led by Morgan Stanley and Robey Warshaw LLP - Idea Cellular didn't list any financial advisers in the deal announcement. Mr Birla turned instead to a pool of former bankers he's brought onto the payroll at his conglomerate, including Aditya Birla Group corporate strategy chief Saurabh Agarwal and head of group corporate finance Ashish Adukia, the people said, asking not to be identified because the information is private.

Mr Birla shunned investment banks because he wanted to avoid any leaks, especially on the details of the transaction structure, according to the people. The billionaire's internal deal team has been working around the clock for the past two months, pushing through weekends to get an agreement, one of the people said. Idea Cellular met Vodafone officials in London, Dubai, Abu Dhabi and Mumbai to hash out the deal terms, the people said.

"Normally you would have investment banks in a deal of this size which is quite complex," John Colley, a professor at Warwick Business School who researches mergers and acquisitions, said by phone. "Even if you don't need new money, you would want the experience of these bankers, and it's rare not to have them."

Though talks first started in July last year, they quickly broke off and didn't resume in earnest until December, according to the people. Negotiations accelerated after the two companies publicly confirmed in late January they were in discussions for a deal, the people said. When visiting London, Mr Birla's team stayed away from larger, more prominent hotels to avoid being spotted, according to one of the people. In Dubai and Abu Dhabi, Birla officials stayed in different hotels from the Vodafone executives so they wouldn't be seen together too often, the person said.

A spokeswoman for Aditya Birla Group declined to comment, while a representative for Vodafone didn't immediately respond to a request for comment.

BLOOMBERG