Reliance FLAG(s) in $207 million bandwidth
Reliance Gateway has acquired 100% of the fully diluted equity of FLAG Telecom, USA for US$207 million.
The Amalgamation Agreement has been unanimously approved by the Board of Directors of FLAG. A meeting of FLAG¨s shareholders is expected to be held in December 2003 to approve the amalgamation.
Amol Dharia, telecom analyst, with Karvy Stock Brokings, says, “This is an important decision as it is going to make Reliance Infocomm. a major player in the infocomm sector in the long run. ¨
Talking of the impact on other players, the acquisition might have, Dharia said, ôAlthough it is too premature to say but players like VSNL or Bharti wont be affected greatly as they get the same service from other players as well. ö
Reliance believes that its acquisition price of US$207 million is very attractive and offers great value to FLAG¨s shareholders.
FLAG Telecom, which is listed on the London Stock Exchange and the Nasdaq, went into bankruptcy in ¨02 with a debt of over $4b. With access to over 50,000 km of undersea fibre optic network, and two hubs in London and the Middle East, the deal catapults Reliance into the big telecom league internationally.
Advisors to Reliance on this transaction are Davis Polk & Wardwell, legal advisors, and Deutsche bank, financial advisor.
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