Mukesh Ambani, chairman of Reliance Industries, has set out a new agenda of cooperation with younger brother Anil’s firm and forecast more opportunities for his company in the power sector.
The warring Ambani brothers appear to be on the verge of arriving at a settlement. The reunion may fall short of a merger but will be enough to strengthen the businesses of both brothers, which have suffered in the course of the quarrel.
Mumbai's Dalal Street appears to be getting ready for the good news as Mukesh Ambani, 54, and Anil Ambani, 52, head for the patch-up.
The family split and division of Dhirubhai Ambani's huge business empire has hurt the respective businesses of the two sons and destroyed shareholder wealth.
Backrooms are abuzz with talk of the impending collaboration. Troubled by increasing competition, dwindling stock price and lack of the legendary Ambani clout in the corridors of power, the brothers are seeking a secret settlement to send a strong signal to pump up the markets.
The architect of this bridge, as in June 2005 and subsequently in May 2010, is matriarch Kokilaben Ambani, who has told her sons in no uncertain terms that it is time to collaborate.
The first sign that something positive was afoot came in November 2010 when Anil's Reliance Anil Dhirubhai Ambani Group (ADAG) (revenue Rs.46,000 crore) dropped his name from the master brand, rechristening it Reliance Group.
Satraps across the two groups gradually began to ease up on the ratcheting up of disinformation and misinformation against one another.
The first agreement that is likely to come through will be between Mukesh's Reliance Industries Ltd (RIL) and Anil's Reliance Communications' (RCom) to lease the latter's telecom tower infrastructure to launch RIL's forthcoming broadband and wireless Internet services. India Today learns that the deal will help Anil substantively reduce his huge debt of Rs.33,000 crore.
The Ambani brothers may also combine in the insurance business. Until last week, Mukesh Ambani's RIL was in talks with Sunil Mittal's Bharti Enterprises to buy the latter's stake in Bharti-AXA, a 76-24 joint venture with the French insurance major AXA. That would have pitted Mukesh Ambani against Anil Ambani's Reliance Life Insurance and Reliance General Insurance in a competitive insurance market. The negotiations between RIL and Bharti broke down abruptly after six months.
Both brothers have been troubled by regulator Comptroller and Auditor General of India (CAG) and even investigative agencies lately, affecting their share prices. On November 30, the RIL scrip rose by Rs.13.80 to close at Rs.779, while Anil's flagship RCom was up by Rs.1.20 to close at Rs.74.10.
Their combined wealth now stands at $28.5 billion (Mukesh is worth $22.6 billion and Anil $5.9 billion, according to Forbes India, October 2011), down from the $85 billion in 2008 at the peak of their slugfest over gas allocation, which ended in the Supreme Court with a bitter defeat for Anil.
Last month, the brothers met at the wedding anniversary celebrations of their sister Dipti Salgaocar in Goa.
ICICI Bank's chairman emeritus and longtime confidant of the family, K. V. Kamath, and the bank's chief executive officer (CEO) Chanda Kochhar are reportedly playing mediators.
Hope 2012 see market touching new heights due to this strong billionaires patch up.
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