Reliance acquires FLAG for $207 million
By siliconindia staff writer   |   Friday, 17 October 2003, 19:30 IST
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MUMBAI: The Reliance group announced its first ever major overseas acquisition on Thursday, through group company Reliance Infocomm. Reliance Gateway Net, a 100% subsidiary of Reliance Infocomm, will acquire global undersea telecommunications operator FLAG Telecom Group. “The all-cash deal, valued at $207m (about Rs 950 crore), was approved by the FLAG board today,” RIL’s vice-chairman and MD Anil Ambani said. The pricing, at $95.61 a share, is at a premium of more than 50% over the closing price of $63 on October 15. FLAG Telecom, which is listed on the London Stock Exchange and the Nasdaq, went into bankruptcy in ’02 with a debt of over $4 billion. It has since re-emerged after Chapter 11 proceedings, during which lenders took over the company. FLAG provides wholesale network services to telecommunications carriers, ISPs, content providers and other broadband operators around the world. 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. In a statement from London, Patrick Gallagher, co-chairman and CEO of FLAG Telecom, said, “We believe this premium offer by Reliance to acquire FLAG represents a strong endorsement of FLAG’s operating strategy and is in the best interests of our shareholders.” Reliance is already a key customer on the FLAG global network, one of the most extensive in the world today. A meeting of FLAG Telecom’s shareholders is expected to be held in December ’03 to approve the amalgamation. (Source: ET)

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