Brothers warn Vodafone to back off in Essar bid

Two of India’s wealthiest brothers have threatened to block Vodafone’s plans to buy mobile operator, Hutchison Essar. Ravi and Sashi Ruia, both managers at Essar, have told the British firm that they will use special ‘operating rights’ to hamper its ability to develop Essar’s business if it wins the $20bn auction for the firm.

While neither company will discuss the issue publicly, it is believed the brothers have told Vodafone boss, Arun Sarin, that if he pursues the firm, they will have the power to veto operational decisions such as re-branding, and are willing to do so.

Essar, a 33 per cent partner in Hutchison Essar, has made it clear that any move by Vodafone to increase its bid for the operator would be deemed hostile. Essar is believed to have told Vodafone that if necessary, it will partner with another Indian player, Reliance, to match any increases Vodafone makes.

That tactic could prove fatal for Vodafone as shareholders have already told the company they are concerned its price is already too high.

According to the Wall Street Journal, Vodafone has offered a non-binding initial bid of $16.5bn (£8.42bn) for Hutchison Essar.

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