Spice minority owners to get sell, swap option in Idea deal

Sources close to the development said Idea would buy out B K Modi's 40.8 per cent shares in Spice Telecom for Rs 77 a share in the first stage of the agreement.  An open offer to Spice shareholders will follow in line with Securities & Exchange Board of India guidelines.  The 70,000 minority shareholders, who hold 138 million shares (or 20 per cent) in Spice, would be given an option either to tender shares in Idea's open offer for Spice or swap their shares for Idea at a ratio based on the price of Rs 158 for Idea and Rs 77 for Spice.  Details of the agreement were finalised at a meeting that concluded 2 am Friday between Aditya Birla group Chairman Kumar Mangalam Birla and Chairman of Spice Communications BK Modi at Taj's Wellington Mews in Mumbai. An announcement is expected early next week.  Modi, who holds 282.5 million shares, will get Rs 2,175 crore from the deal. The California-based industrialist will also take home a hefty fee for signing a non-compete agreement with Idea Cellular.  Under the agreement, Telekom Malaysia's subsidiary TM International, the 39.2 per cent shareholder in Spice, would be offered 20 per cent in Idea Cellular at Rs 158 a share.  The total cost to Idea Cellular for the acquisition would be around Rs 5,300 crore excluding the non-compete fees for which it has started raising debts from the bankers.  Idea Cellular shares would be offered to Telekom Malaysia through a preferential offer, sources added, and will not require an open offer for Idea Cellular.  Sources said the preferential issue to Telekom Malyasia will take two or three months to conclude since it would require permission from the Foreign Investment Promotion Board.  TM International will also sign a strategic agreement with Idea Cellular to roll out 3G services