The failed $1.5 billion merger talks between Tata Teleservices and Hughes Telecom India has turned the companies into rivals. The collapse of the deal is bad for both startups but worse for Hughes, as it missed an opportunity in one of Asia's most promising telecom markets. The talks broke down over disagreements on valuations of the businesses. Tata's parent company says it will now focus on growing organically in its existing markets in India.

1. The failure of the $1.5 billion
merger talks last week between
India’s TTaattaa TTeelleesseerrvviicceess LLttdd.. and
HHuugghheess TTeellee..ccoomm IInnddiiaa LLttdd.. is bad
news for both startups. But the Indian
unit of HHuugghheess EElleeccttrroonniiccss CCoorrpp.. will
be the worse off for not closing a deal in
one of Asia’s most promising and rap-
idly consolidating telecom markets.
Hughes Tele.com and Tata Teleser-
vices, which run fixed-line phone and
Internet services in the western state of
Maharashtra and Andhra Pradesh in
the south, said Jan. 15 that their five-
month merger talks broke down pri-
marily over valuation of their busi-
nesses. After the failed talks, S. H.
Rajadhyaksha, vice president of TTaattaa
IInndduussttrriieess LLttdd.., the parent company of
Tata Teleservices, said his company had
T H U R S D A Y J A N U A R Y 2 4 2 0 0 2
$ 2 . 0 0 • £ 1 . 5 0 V O L . 6 N O . 8 2
Now that UUBBSS WWaarr--
bbuurrgg has won fast-
track approval in bankruptcy court for
its purchase of EEnnrroonn CCoorrpp..’s whole-
sale energy trading business, new
speculation has arisen about how far
the Swiss bank will go to become a
major player—and whether it will use
its new position to undercut the value
+ See Hughes, page 21
+ See UBS, page 20
Creditors fear UBS
energy unit will trade
against Enron assets
Forbiginvestors,Tycobreakupspellsopportunity
Customer service: 1-888-667-3325 or subs@thedeal.com
2 Catalog retailers draw strong interest
2 Huizenga exec opens buyout firm
3 Official pinpoints Korea deal hurdles
4 Italian insurance battle heads to court
4 BG buys Enron oil and gas assets
4 Leading Indian telecom prices IPO
16 SCH may have to sell TV stake
16 Allianz acquires Slovakian insurer
16 Médéric buys stake in Agbar insurance unit
16 Allianz, Korea’s Hana expand partnership
19 Newport purchases rival Micro Robotics
20 Hewlett heir fires new salvo at HP deal
8 VENTURE MATTERS
Catena Networks, Current Communications,
Mohr Davidow Ventures
10 THE DAILY DEAL INDEXES
11 ARBITRAGE
12 SCOREBOARD
M&A acquirer advisory fees; multiples on LBOs
and strategic acquisitions; investment-grade loan
prices; accountants on top IPOs; post-merger
accounting charges; venture capital investments
in Florida; divestments in Europe; dot-com
update
18 IPO OUTLOOK
Immuno-Designed Molecules, Besiktas
Football Investments, Fukujin, Media Partners
18 MOVERS&SHAKERS
19 NEW&NOTEWORTHY
Citigroup•Salomon Smith Barney,
Stratos Lightwave•Tsunami, GSE•Serrot
International, Remec•Spike Broadband,
World Am Communications•Ascendiant
Capital, EuroTrust•Firstream•Alphasys,
Yadkin Valley Bank•Main Street BankShares
19 INPLAY
Carnival•Royal Caribbean•P&O Princess
Cruises, Expedia•Classic Vacation, Mento
Graphics.•IKOS Systems, Spar Aerospace,
Hynix Semicondcutor•3R Inc.
22 RULES OF THE ROAD
23 COMPANY INDEX
COLUMNS
2 DEAL SENSE
17 INDUSTRY INSIGHT: Hit the accelerator
FOR MORE NEWS, SEE WWW.THEDEAL.COM
•Banca Di Roma, Bipop agree to combine
•Dynegy CEO criticizes Enron trading
•Houlihan’s restaurant chain files for Ch. 11
WWW.THEDEAL.COM
m&a
bankruptcy
by David Weidner
LETTER FROM DELAWARE + 5 DIPS + 5
Hughes’Indiadealcrashes,turningformerpartnerintorival
by Josey Puliyenthuruthel in Bangalore
Laboring to cut costs and reach
profitability, AAggeerree SSyysstteemmss
IInncc.. is trying to sell several technology
lines and divest three production
plants.
The microelectronics maker hopes
the moves will help it break even by re-
ducing quarterly operating expenses
from $900 million to $700 million.
Some analysts have said it needs to cut
operating expenses to $500 million to
$600 million to break even.
Agere also projected a $300 million
charge for 2002 to account for 1,400 lay-
offs and the plant divestitures.
Among the products up for sale are
the Agere’s wireless local area network
(WLAN) circuit boards. According to
Jim Jungjohann, a telecommunications
equipment analyst with CCIIBBCC WWoorrlldd
MMaarrkkeettss, its analog modem, phone and
corporate phone-line chips also were
for sale, but the company may have
pulled the assets off the block for lack
of interested buyers.
On Wednesday, Agere announced
revenue of $537 million for its fiscal
+ See Agere, page 20
+ SSeeee ppaaggee 66
m&a
Elektrim is one of Poland’s best-known
companies, and its difficulties illustrate
just how badly bankruptcy reform in the
Central European nation is needed
Elektrim is one of Poland’s best-known
companies, and its difficulties illustrate
just how badly bankruptcy reform in the
Central European nation is needed
Questions
about ac-
counting may have forced
TTyyccoo IInntteerrnnaattiioonnaall LLttdd.
to abandon its business
strategy and split up its
highly respected manage-
ment team, but some
shareholders said they ex-
pect investors to benefit
from the breakup of the
conglomerate in the long
run.
“This is an outstand-
ing management team,”
said Bruce Bartlett, direc-
tor of growth investing at
OOppppeennhheeiimmeerr FFuunnddss IInncc.
“I have a lot of faith that
they’ve selected the ap-
propriate time to under-
take this.”
Those benefits haven’t
come over the short term.
investing
+ See Tyco, page 21
by Sarah Cohen
Agerewantstosellwirelesstelecomunit Using fallen EEnnrroonn
CCoorrpp.. and its contro-
versial use of off-balance sheet vehi-
cles as a backdrop, Securities and Ex-
change Commission Chairman
Harvey Pitt Wednesday detailed the
regulatory agency’s proposed reform
of the financial reporting and disclo-
SEC’sPitt: Post-Enron
accountingrulescoming
by Shanon D. Murray in San Diego
regulation
+ See SEC, page 21
Poland’s
Enron?
B A N K RU P T C Y T H U R S D AY
IM
InvestorMemo
LARGEST SHAREHOLDERS
Tyco Corp.
four-way breakup
Alliance Capital Management LP 9/30/01 5.65% 121,741,858
Fidelity Management & Research Co. 9/30/01 4.42 95,356,883
Smith Barney Asset Management 9/30/01 3.12 67,291,958
Barclays Global Investors NA 9/30/01 2.53 54,477,778
Janus Capital Corp. 9/30/01 2.50 53,952,428
Putnam Investment Management 9/30/01 2.36 50,974,263
Davis Selected Advisers LP 9/30/01 2.23 48,056,101
MFS Investment Management 9/30/01 1.80 38,876,833
American Century Investment
Management Inc. 9/30/01 1.66 35,769,524
J. P. Morgan Fleming Asset Management
(USA) Inc. (N.Y.) 9/30/01 1.57 33,952,522
State Street Global Advisors (U.S.) 9/30/01 1.57 33,927,216
Wellington Management Co. llp 9/30/01 1.42 30,614,421
Westar Capital Inc. 9/8/97 1.30 28,000,000
Vanguard Group 12/31/01 1.25 26,991,965
AIM Management Group Inc. 9/30/01 1.10 23,765,691
Morgan Stanley Investment
Management Inc. (U.S.) 9/30/01 1.01 21,730,668
Jennison Associates llc 9/30/01 0.95 20,391,397
Deutsche Asset Management (U.S.) 9/30/01 0.89 19,208,597
TIAA-CREF Investment Management llc 9/30/01 0.88 18,967,898
Banc of America Capital
Management Inc. (Mo.) 9/30/01 0.86 18,605,989
Source: Thomson Financial’s Sharewatch Web
LATEST
PERCENTAGE SHARESREPORT
by Charles Sisk in Boston