Mukesh and Anil Ambani agree to end their feud
Billionaire brothers Mukesh and Anil Ambani have signed an agreement in an attempt to end their five-year feud, according to news reports.
Mukesh's company, Reliance Industries Ltd., and Anil's firm, Reliance ADA Group, will scrap their 206 non-compete agreements that "prevented them from entering the same sectors," the Wall Street Journal reported.
Those agreements were struck after the brothers in 2005 split up the multibillion-dollar Reliance conglomerate of companies founded by their father, Dhirubhai.... The latest deal means Mukesh can enter growth industries such as power, telecommunications and financial services, while Anil can try his hand at oil and gas exploration, retail and petrochemicals.
The companies issued a statement that said they were "hopeful and confident that all these steps will create an overall environment of harmony, co-operation and collaboration between the two groups."
India's Supreme Court ruled on May 7 that Mukesh does not have to supply natural gas to Anil according to the terms of a family agreement because a higher price set by the government should take precedence, the Journal report noted.
Both companies declined to comment on what spurred their détente. Rajesh Chakrabarti, a professor at the Indian School of Business in Hyderabad, said the Supreme Court's ruling forced the two sides to the negotiating table regarding the natural-gas dispute, making further compromise possible. But he cautioned that the scrapping of old pacts was likely a "cold business calculation" by the companies after reassessing their market positions.
The Financial Times noted that the brothers will retain one non-compete agreement, under which Reliance Industries would not enter the gas-fired power plant business until at least 2022.
In a later report, the FT said that despite this concession, analysts believe Mukesh "will nevertheless be keen to enter other sectors in which his younger brother is active." (Sources: Wall Street Journal, May 24, 2010; Financial Times, May 24, 2010 and May 25, 2010.)
Posted Tuesday, May 25, 2010 • Permalink