Market analysts are wondering about the nature of the relationship between MTN and African cellular operator Celtel following MTN`s UK court action.
Late yesterday, the market was stunned by MTN`s announcement that it had won permission from a UK court to examine documents that it claims could prove that legally binding undertakings had been given in favour of its offer of $2.673 billion (R16.787 billion) to acquire 100% of Celtel`s fully diluted share capital.
MTN`s announcement trounces the surprise purchase of Celtel by Kuwaiti telecommunications company MTC for $3.3 billion, which was considered by some market observers to be overly generous. Celtel was preparing to list on the London Stock Exchange and considering a secondary listing in Johannesburg.
The deal between Celtel`s major shareholder Mohamed Ibrahim was concluded rapidly over the Easter long weekend. At the time, Actis, one of the minority shareholders, told ITWeb the MTC proposal was made on 25 March and concluded the following Sunday.
Steve Minnaar, a portfolio manager at Old Mutual Asset Managers (OMAM), says it is unclear from yesterday`s MTN statement if it had reached an agreement to bid for Celtel or if it had first right of refusal.
"It is totally unclear if MTN is looking for a deal-breaker - the payment of money to walk away from an understanding - or if they even really believe they had bought the company," he says.
OMAM is one of the largest institutional investors in MTN with a shareholding of more than 10%. It was also a minority holder in Celtel with about 1%.
Another issue of contention is that MTN had not released a cautionary on the JSE`s news service about the possibility of it entering into a deal of this magnitude.
"The precise rules about issuing such a cautionary seem to be a bit vague at the moment. If MTN did buy Celtel, it could always say the deal was earnings neutral and that the purchase was aimed at the future. However, I would say that a deal worth $2.7 billion should be announced," Minnaar says.
MTN shares were highly traded on the JSE this morning and by 10.55am the share price had edged up 40c to R43.90.
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