Ruling soon on bid for Business Connexion
The tribunal sat through closing arguments in the controversial case yesterday, 15 months after the bid was made. The long-running uncertainty has triggered staff losses and dented Business Connexion’s profits as customers wait to see if it will remain independent or be swallowed by the fixed-line operator.
Telkom’s offer of R9 a share plus a dividend of 25c in March last year was a 15% premium to the trading price, and the shares instantly gained 91c to hit R8,95. Now they are trading at about R7,60 with investors not convinced the deal will get the nod.
Yesterday, advocate David Unterhalter for the merging parties said opponents to the deal had taken a scatter-gun approach and devised ever-changing theories as to what the outcome of an acquisition would be and how it may damage the market.
“The theories have not only changed significantly in the course of the presentations but continue to develop per- mutations they didn’t address in their initial presentations or in the expert evidence led,” Unterhalter said.
The opponents had also over- estimated the effect of the deal by suggesting that Telkom and Business Connexion held a greater share of various segments of the market than they actually had, he said. The objections did not meet the requirements necessary to have the deal vetoed, he said.
The bid is opposed by Internet Solutions, the South African Small Medium and Micro Enterprise Forum and the Internet Service Providers’ Association. The forum’s position is Telkom could use the services it gained from Business Connexion to extend its monopoly over telecommunications into the information technology arena too, and provide bundled and cross-subsidised services that no rival could match. The competition commission also opposed the deal, since Telkom would become the only player able to offer a full range of network infrastructure, electronic communications and IT services.
It would also substantially reduce competition by eliminating one of the players and was likely to directly harm consumers — possibly even economic growth — the commission said.
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