Cellular network operator Vodacom has offered to buy the entire issued share capital of Teljoy in a deal worth R870 million, or R7.50 per share. Vodacom says it plans to delist Teljoy after the acquisition.
The offer, made with the assistance of an asset-backed financing arrangement with RMB Corporate Finance, represents a 74% premium on the Teljoy share price on 27 August, when the first cautionary notice was issued.
The share closed at R6.25 on Friday and was unchanged late on Monday morning.
Teljoy says the acquisition of a cellular service provider by a network operator is in line with global trends.
"After an initial growth phase, the cellular industry in SA has reached maturity over the last two years," the company says.
"This has resulted in the consolidation of service providers in order to place them in a position to face the challenges ahead and achieve economies of scale through rationalisation. This has led to a large number of mergers and acquisitions within the industry in recent years."
The company says the number of independent service providers has been reduced, with most service providers now being owned by the network operators.
"This activity in the South African market mirrors global trends towards rationalisation of service providers, most notably in the UK, on which the South African cellular industry was modelled.
"Internationally, most cellular network providers do not utilise the service provider model," it adds.
Joan Joffe, Vodacom`s group executive of corporate affairs, says the network operator is acquiring the whole company, including the satellite and television hire businesses, but the non-core businesses will be accessed over the next nine months.
She says similar acquisitions are also part of a strategy being considered by the group, but declines to comment on whether talks with other service providers are under way.
Teljoy`s directors, who are recommending that shareholders accept the Vodacom offer, say the company will be in a better position as part of Vodacom to respond to a changing business environment.
The move will also allow Vodacom to rationalise all its service providers` marketing functions and information systems.
The financial effects of the deal, which is subject to shareholder and regulatory approval, would see Teljoy`s headline earnings per share for the year to 31 March 1999 rise to 74c from 51c and the net asset value per share to 750c from 232c.
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