Anil Ambani’s Reliance Communications (Rcom) and South African telecom giant MTN on Friday announced they were calling off talks aimed at creating a $66 billion telecom group.
“The two sides were unable to conclude the transaction due to certain regulatory issues,” said a RCOM spokesperson in a statement.
MTN and Reliance Communications started exclusive talks on May 26 and the deadline was extended to July 21.
The extension, announced on July 10, came after a claim on shares in RCom by Mukesh Ambani, estranged brother of RCom chief Anil Ambani, and a sharp drop in share prices created obstacles to completing a deal by the original deadline of July 8.
A deal would have created a $66 billion emerging markets telecom group with operations in about two dozen countries and around 120 million subscribers. When the talks began, MTN had a market capitalisation of $38 billion and Reliance Communications was worth $28 billion, but a sharp slide in markets has eroded valuations.
Mukesh’s Reliance Industries Ltd (RIL) last month wrote to MTN saying that it has right of first refusal over a sale of controlling stake in RCom. Effectively, what Mukesh’s group has said was that any sale of a controlling stake in Reliance Communications to anyone but Reliance Industries was illegal.
MTN in a statement to Johannesburg Stock Exchange said, “With regard to exclusive negotiations relating to a potential business combination between MTN and RCOM, owing to certain regulatory issues, the parties are unable to conclude a transaction. Accordingly, it has been mutually decided to allow the exclusivity agreement to lapse.”
RIL was not immediately available for comments.
THE BIG DEAL
A history of RCom, MTN talks.
- May 13: Bharti says in exploratory talks with MTN
- May 16: Bharti- MTN reach ‘in-principle’ agreement and a term sheet initiated between two lead bankers
- May 21: MTN board meets to consider term sheet. MTN proposes alternate model where Bharti becomes its subsidiary
- May 24: Bharti announces that talks with MTN have been called off
- May 26: RCOM and MTN enter into 45-exclusivity perod for talks to combine both telcos
- June 14: Mukesh Ambani’s Reliance Industries (RIL) entrs fray — claims the first right of refusal in case of sale or change of management of of RCOM
- July 3: RIL calls RCOM for mutual conciliatory talks before initiating formal arbitration
- July 7: RIL says no RCOM representative had turned up for a meeting with RIL
- July 7: RCOM invies RIL to meet in the week beginning July 14 “to clarify any doubts” on the deal structure being discussed with MTN
- July 8: 45-day exclusivity period ends
- July 9: RCOM -MTN decide to extend exclusivity period till July 21
- July 17: RIL starts arbitration proceedings against RCOM
- July 18: RCOM and MTN allow exclusivity period to lapse; end talks
Courtesy :- IBN Live