The First Right of Refusal is a potent weapon in shareholding deals. And it is dead
Do you remember the news headlines in India in July 2008? Anil Ambani was pursuing a multi-billion dollar amalgamation deal with South African telecom giant MTN. But hovering above the possibility of creating a 70-billion-dollar entity was a peculiar shadow. The fractious relationship between India’s richest brothers was threatening to scuttle the entire deal (ultimately it did): The elder Ambani pulled a common device used in the corporate world. He claimed his unit had right of first refusal (RoFR) for any deal that would change the control structure of Reliance Communications; to go ahead would be a breach, with severe legal repercussions. Was it posturing or real ammunition? MTN was unsure: The deal died.
Infographics: Malay karmakar(This story appears in the 30 April, 2010 issue of Forbes India. To visit our Archives, click here.)