Idea Cellular Limited (NSEI:IDEA) reached an agreement to acquire Vodafone India Limited from Vodafone Group Plc (LSE:VOD) for an enterprise value of approximately INR 830 billion, in a merger of equals transaction, on March 20, 2017. As per terms, Idea Cellular will issue equity shares to Vodafone equal to 50% of the post issue paid up capital. The transaction will include all the assets including standalone towers but excluding Vodafone Group's 42% stake in Indus Towers. Vodafone Group will own 45.1% in the combined entity, after transferring a stake of 4.9% to the Aditya Birla Group for INR 39 billion in cash concurrent with completion of the merger. The Aditya Birla Group will then own 26% and has the right to acquire up to a 9.5% additional stake from Vodafone under an agreed mechanism with a view to equalizing the shareholdings over time. If the Aditya Birla Group does not equalize its stake, Vodafone will reduce its holding in order to equalize its ownership with that of the Aditya Birla Group. Until equalization is achieved, the additional shares held by Vodafone will be restricted and votes will be exercised jointly under the terms of the shareholders' agreement. As of June 1, 2018, Idea Cellular Limited proposed a new name for the combined entity as Vodafone Idea Ltd post its merger with Vodafone India Limited. Vodafone's contribution of net debt will be dependent on Idea's net debt at completion as well as customary closing adjustments. Vodafone will contribute INR 25 billion more net debt than Idea at completion. The transaction has a break-fee of INR 33 billion that would become payable under certain circumstances. The transaction values Vodafone India at 6.4x EV/LTM EBITDA.

Following completion, the Board of Vodafone India Limited will be comprised of 12 Directors including three directors appointed by each of Vodafone Group and the Aditya Birla Group, and six independent directors. The Aditya Birla Group will have the sole right to appoint the Chairman, who will be Kumar Mangalam Birla. Vodafone will have the sole right to appoint the Chief Financial Officer. Both Vodafone Group and the Aditya Birla Group will jointly agree on the appointment of the Chief Executive Officer and the Chief Operating Officer and will be confirmed prior to closing of the transaction. The existing leadership teams of Idea Cellular Limited and Vodafone India Limited will continue to manage their separate businesses and be accountable for each company's operational performance until the merger becomes effective. It is only upon completion of the merger that the two businesses will cease to operate as distinct and competing entities. Kumar Mangalam Birla will be the Non-Executive Chairman of the merged Company. The composition of the proposed leadership team of the new company is as follows; Akshaya Moondra, currently Chief Financial Officer at Idea, Ambrish Jain, currently Deputy Managing Director at Idea, will be responsible for Circles Operations and Service Delivery, Nick Gliddon, currently Director of Vodafone Business Services at Vodafone India, will be responsible for the Enterprise Business, Manish Dawar, currently CFO of Vodafone India, will have overall responsibility for integration planning, governance and execution, Sashi Shankar, currently Chief Marketing Officer at Idea, will be responsible for Marketing and Brand strategy for the consumer business, Vishant Vora, currently Chief Technology Officer of Vodafone India, will have responsibility for networks and overall technology strategy, Prakash Paranjape, currently Chief Information Officer at Idea, will be responsible for the company's IT operations, Suvamoy Roy Choudhury, who leads Vodafone India's Human Resources, will be responsible for the Human Resources function, Kavita Nair currently the Associate Director, Commercial Operations, at Vodafone India, will lead digital transformation across all functions, Navanit Narayan, currently Chief Service Delivery Officer at Idea, will be in charge of Strategy, P Balaji, currently Vodafone India's Head of Regulatory, External Affairs and CSR, will be responsible for Corporate and External Affairs, Kumar Das, currently Vodafone India's General Counsel, will lead the legal function, Rajesh Srivastava, currently Chief Commercial Officer at Idea will hold charge of the Procurement Function will directly report to Balesh Sharma (currently Chief Operating Officer of Vodafone India). Balesh Sharma will be responsible for the combined business's strategy and its execution as well as driving integration. Anil Tandon and Rajat Mukherjee, currently Head of Technology and Head of Corporate Affairs of Idea will be full time advisers to the merged business in their respective areas of expertise, working closely with Vishant and Balaji, respectively.

The transaction is subject to approvals from the Idea shareholders, relevant regulatory authorities, competition commission of India, creditors, stock exchanges, Department of Telecommunications, Reserve Bank of India, Foreign Investment Promotion Board and other governmental authorities and third parties, as may be required, filling of scheme with NCLT, approval from SEBI and listing approval. The deal is also subject to other customary closing conditions, including the absence of any material adverse change. The transaction is subject to approval from Vodafone shareholders. The transaction has been approved by the Board of Directors of Idea Cellular Limited on March 20, 2017. As on July 24, 2017, competition commission of India has approved the transaction. On August 4, 2017, SEBI approved the transaction. On August 7, 2017, Idea filed the application before NCLT for the approval. As on September 8, 2017, based on orders of National Company Law Tribunal meeting of shareholders will be held on October 12, 2017. National Stock Exchange and Bombay Stock Exchange have issued no adverse observation letter for the transaction. On October 12, 2017, the transaction is approved by the shareholders of Idea Cellular Limited. On November 22, 2017, the transaction is approved by Income Tax Department. On January 11, 2018, the transaction has been sanctioned by the National Company Law Tribunal. As of June 4, 2018, transaction is still subject to final approval from Department of Telecom is required. As of July 26, 2018, Department of Telecom finally approved the deal. The transaction is expected to be closed in March 2018. As of July 25, 2018, the deal is expected to close by the end of August 2018. The transaction is expected to be accretive to Vodafone's cash flow from the first full year post-completion.

Morgan Stanley and Robey Warshaw acted as financial advisors while Bank of America Merrill Lynch, Kotak Investment Bank, Rothschild and UBS acted as financial advisors to Vodafone Group and Vodafone India. Rajat Sethi and Tanya Aggarwal of S&R Associates, Roland Turnill, Susannah Macknay, Claire Jackson, James Cook, David McKendrick-Ness, Claire Jeffs, Will Turtle, Ying Wu, Sam Buchdahl, Mike Lane, James Hume, Duncan Blaikie, Nikhil Shah and Michaela Peck of Slaughter and May and Pallavi Shroff of Shardul Amarchand Mangaldas & Co acted as legal advisors to Vodafone Group and Vodafone India. Bomi Daruwala, Krishna Kishore, Amitjivan Joshi and Yatin Narang of Vaish Associates, Soumya Hariharan and Nisha Kaur Uberoi of AZB & Partners and Alka Bharucha of Bharucha & Partners acted as legal advisors while Axis Capital Limited acted as fairness opinion provider to Idea. Walker Chandiok & Co LLP and Bansi S. Mehta & Co acted as joint independent valuers in the transaction. Goldman Sachs acted as financial advisor to Aditya Birla Management Corporation Pvt. Ltd., an investor in Idea Cellular Limited. Tom Levine and Sanjeev Dhuna of Allen & Overy LLP acted as legal advisors for Idea. Ernst & Young UK acted as accountant to Vodafone Group Plc.