Tata completes Quippo Merger Deal

The latest announcement that took place in January 2009 of merger of two companies: Quippo Telecom Infrastructure, QTIL and Tata Teleservices was materialised and completed on 18th august, Tuesday. The merger was done complying with the similar terms making no change in the structure of the deal, except Quippo announcing to pay Rs 33 crore less i.e. 2,367 crore INR (It had agreed to pay Rs 2400 crore in earlier announcement). Quippo will soon be transferring all their towers to Wireless Tata Telecom Infrastructure (WTTI) which is Tata’s tower company and in exchange will receive 49% stake as well as management control of the entity getting merged. Tatas will thus hold a 51% stake. To complete the transaction, board of two companies: Quippo and WTTI held a meeting in Mumbai.

Being the subsidiary of SREI Infrastructure Finance’s telecom tower, QTIL had 5000 towers approximately while WTTI had 13,000 towers at the time of announcement of merger.. Although there is no timeframe available yet, both SREI and WTTI are planning to list the combined entity. The management structure is also finalised by the Tatas and QTIL both and its decided that Tata and QTIL will have five and four representatives respectively on the board and will also nominate an independent chairman to make it a 10-member board.

To provide the details of the funds raised and to answer the industry analysts who had earlier declared that the deal had run into trouble owing to funding constraint (because of 18 months delay in closing the transaction), Mr Kanoria who is vice President of Quippo said that funds were raised from IDFC Private Equity, Oman Investment Fund and Mezzanine capital and debt.

It is also known that 900 crore out of 2367 crore was raised by Quippo after selling shares in the secondary market and issuing fresh equity. There were contributions from majot share holders like IDFC Private Equity, contributing Rs 250 crore as well as OIF and SREI Infrastructure Finance who invested the amount that remained.

With the finalisation of this awaited deal by closing the transaction, both the companies have resolved the intense speculation spreading in the industry and proved that there were no funding constraints that led to such delay.