MTN has sent a letter to Telkom inquiring about its romance with data-only network Rain.
This, after Telkom announced today that it is evaluating Rain’s non-binding tie-up proposal, although it is not yet ready to express a view on the offer.
MTN seems not to be amused by the announcement, as it was the first company to make a move on Telkom.
As the race to buy Telkom hots up, MTN issued a cautionary statement to shareholders this afternoon about Telkom’s dance with Rain.
“The board of directors of MTN has considered the announcement issued by Telkom in which it refers to a non-binding proposal that Telkom has received from Rain,” says MTN in the statement.
“Based on such announcement, the board of MTN has addressed a letter to the board of Telkom containing MTN’s comments thereon. MTN received a response from Telkom, advising that it will respond to the MTN letter more fully in due course. A further announcement will be released by MTN, setting out its position with regards to the future of the transaction.
“In the meantime, shareholders are advised to continue to exercise caution when dealing in the company’s securities, as this could have a material effect on the share price of MTN.”
Rain’s initial bid to merge with Telkom failed in August, as it was deemed illegal by the Johannesburg Stock Exchange’s (JSE’s) Takeover Regulation Panel (TRP).
At the time, Rain declared its desire to tie-up with Telkom without prior approval of the JSE panel − a move that irked the TRP.
The TRP said the Rain announcement was issued without its prior approval, as required in terms of Regulation 117 of the Companies Regulations.
Rain then withdrew its bid after being chastised for acting illegally in making its proposal public.
However, in a turn of events today, it said it has formally approached Telkom for a marriage.
If successful, Rain and Telkom combined will become a telco titan, with a value north of R40 billion. Rain is valued at around R16.67 billion, while Telkom’s market cap is around R24.24 billion.
Toto Investments also remains in contention to buy Telkom, after making an offer to government, which holds a significant share in the company.
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