Bharti Airtel and MTN Abandon $23 B Merger

123jump.com Staff
30 Sep, 2009
New York City

Bharti Airtel and MTN Group agreed to shelve their merger talks after two companies and South African government failed to agree on management structure. MTN Group stock is expected fall and rand in local trading decreased 2.5%.

[R]9:00 PM Mumbai – Bharti Airtel and MTN Group agreed to shelve their merger talks after two companies and South African government failed to agree on management structure.[/R]

The largest telecom operator of India Bharti Airtel and South Africa based MTN Group Ltd abandoned their merger talks after two companies failed to agree on terms. The largest cross border deal would have valued the transaction at $23 billion.

The merger talks were abandoned second times on the disagreement with the management structure and for the first on the price offered for the MTN shares.

South Africa insisted on retaining local management control. Communications Minister Siphiwe Nyanda said to reporters in Johannesburg that the government prefers the local management control and added, “Its management must remain South African.”

In the late May of this year, Bharti had offered 86 rand or $11.4 in cash and 0.5 of Bharti share for each stock of MTN to the tune of 49% stake in the company. Later in September Bharti increased the cash portion of the offer and offered to sell 33% in Bharti for $100 billion.

MTN shareholders will acquire 36% stake in Bharti. The two way transaction would have allowed minority holding in each other company and avoided dual listing restrictions that India has.

South Africa based MTN has expanded as far as Nigeria and Iran and has now 100 million subscribers and Bharti added 8.44 million subscribers in the third quarter to 102.4 million subscribers.

MTN Group has rejected second takeover approach in as many years after rejecting preliminary offer from India based Reliance Communications.