Reliance Communications (RCom) and South African telecom major MTN Group are close to finalising a reverse merger deal under which RCom will become a subsidiary of MTN Group and its chairman Anil Ambani will initially hold 28 to 30 per cent in the merged entity, whicg would make him the largest shareholder.
The deal would create a telecom colossus with 115 million subscribers in 25 countries.
Ambani, who holds 66 per cent in RCom, may then buy another 4 to 6 per cent either through market operations or from shareholders to reach a 34 per cent shareholding in MTN through an all-cash deal. The promoters will have to pay $1.8 billion to $2.5 billion to buy the residual stake.
MTN's promoters will hold the remaining 65 per cent stake in the merged entity.
The Ambanis do not want to exceed a 34 per cent holding in MTN because South African rules mandate that crossing the 35 per cent limit invites a "tender offer" (open offer) for 20 per cent of shares.
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