Telecoms firms MTN and Telkom told their shareholders that they have entered into a formal discussion about MTN buying Telkom. Picture, Siphiwe Sibeko, Reuters.
Telecommunications companies MTN and Telkom told their shareholders that they have entered into a formal discussion about MTN buying Telkom.
In similar statements released on the JSE on Friday, both companies said the discussions were about MTN acquiring the entire issued share capital of partially state owned Telkom, in return for shares or a combination of cash and shares in MTN.
If the deal goes through, this means MTN will have to buy out the government as it holds a 40 percent stake in Telkom, while the Public Investment Corporation (PIC) owns a further 14 percent of Telkom’s equity.
The companies said the discussions were at an early stage, and there was no certainty that the transaction would be consummated.
"The transaction, if concluded, may have a material effect on the price of the company’s securities. Accordingly, shareholders are advised to exercise caution when dealing with the company’s securities until a further announcement is made," they added.
In its last results, MTN announced that it had left Yemen and Syria to simplify its portfolio and focus on a Pan-African strategy under its Ambition 2025 plan.
Telkom's share price shot up 27.42 percent in Friday morning trade, to R42.50. MTN's shares went up by 2.59 percent to trade at R13.79.
BUSINESS REPORT ONLINE