MTN Group has walked away from talks to acquire Telkom, sending the partially state-owned telecommunications operator’s shares crashing nearly 25%.
“MTN terminated discussions in relation to the MTN proposal on 18 October as Telkom was not in a position to provide MTN with assurances around exclusivity,” Telkom said in a statement to investors published shortly after markets opened on Wednesday.
“Discussions were at an early stage and had not progressed to due diligence nor had a binding offer been received by the Telkom board of directors,” Telkom said.
In a separate statement to investors, issued nearly two hours after Telkom’s, MTN said: “After extensive engagements and deliberations between the parties, shareholders are advised that the discussions regarding the proposed transaction have terminated, as the parties were unable to reach agreement to their mutual satisfaction on the process going forward.”
The decision to walk away comes after MTN appeared to get cold feet about an acquisition at the end of September. This was after Telkom said its board was entertaining a separate proposal from wireless broadband operator Rain.
Earlier this month, Bloomberg reported that the talks had stalled after Telkom issued a Sens statement in which it said the board had received a proposal to acquire Rain. This appeared to signal a willingness by Telkom to engage with Rain about its proposal.
Also Read: Telkom shares plunge on report MTN talks have stalled
In a statement to investors, published on 30 September — the same day Telkom said its board was considering the Rain proposal — MTN said it had written to Telkom’s board seeking clarity about any discussions with Rain.
Also Read: Rain muddies the waters with approach to Telkom
“A further announcement will be released by MTN, setting out its position with regards to the future of the transaction,” MTN said, suggesting it was prepared to walk away from its talks to buy Telkom.
Also Read: MTN talks to buy Telkom stall: sources
Any deal between MTN and Telkom was always going to be fraught with difficulties, not least because it would require a green light from government, which directly holds 40.5% of Telkom’s equity. It would also have been a tough fight to get the transaction past both communications regulator Icasa and the Competition Commission.
