Aditya Birla group's Idea Cellular has informed that it would buy 40.8 per cent stake in Spice Communications, for Rs 2176 crore or at Rs 77.3 per share.

Under an arrangement announced by the two companies, McorpGlobal Communication, the promoter of Spice Communications, will divest its 40.8 percent stake in Spice to Idea for Rs 2175.91 crore.

Idea will also pay MCorpGlobal Communications a non-compete fee of 5.44 billion rupees.

Further, Idea will merge Spice with itself through a share swap, where Spice shareholders would get 49 Idea shares for every 100 Spice shares held.

After the merger process, Idea will also make a preferential allotment to Telecom Malaysia of 464.73 million Idea shares, or 14.99 percent of Idea's enlarged share capital, at Rs 156.96 each.

With this acquisition, Idea cellular will gain entry in the wireless markets in Punjab and Karnataka, which account for 11 per cent of India's total wireless subscribers.

Spice has a total of 4.5 million subscribers in Punjab and Karnataka circles.

Enam advised Spice while Merrill Lynch and Lazard were the merchant bankers for Idea Cellular.