Telkom rejects Rain
Telkom has informed shareholders that it has terminated discussions relating to Rain’s proposal about a potential acquisition.
Rain made a formal proposal to Telkom on 30 September 2022, suggesting that Telkom buy it with newly issued shares.
“After initial discussions, but prior to any due diligence, the parties have decided that a suitable transaction is not possible at this time,” Telkom said in a notice on the JSE news service.
“Telkom continues to execute its strategy to unlock value for shareholders and will provide an update on progress in this regard in due course.”
The announcement comes in the wake of a tumultuous series of negotiations involving Telkom, Rain, and MTN.
MTN and Telkom formally disclosed that they were in discussions in mid-July 2022. They revealed that MTN had proposed acquiring Telkom’s entire issued share capital in return for shares or a combination of cash and shares in MTN
In August, Rain announced to press that it had proposed its own deal to Telkom.
However, Telkom denied receiving the proposal, and the Takeover Regulation Panel issued a stern rebuke against Rain’s media statements, saying they were made without approval.
Rain ultimately retracted its Telkom merger offer announcement and issued a properly approved formal proposal a month later.
However, as a result of Telkom’s discussions with Rain, MTN walked away from the negotiating table, causing a 25% drop in Telkom’s share price.
A source with knowledge of the discussions told MyBroadband that MTN elected to end talks because it didn’t want the negotiations to run concurrently.
This was because MTN’s past experience with such matters showed that it slows negotiations down, likely dragging a three-month process out over a year or more.
When Telkom couldn’t provide a firm answer for how long it would need to consider Rain’s offer, MTN decided to terminate their discussions.
With Rain’s proposal now handled, MTN could reconsider continuing its talks with Telkom.
Loading ...