Bharti and MTN have decided to disengage as they need SA government approval for their planned deal, the merger discussions we supposed to end on September 30 2009.
According to the officials from the Brunswick Group, a communication group that talked to Business Times on behalf of the MTN Group, South Africa’s MTN had called off talks for a planned tie-up owing to the inability of the South African government to accept the deal in its current form.
“Bharti and MTN have decided to disengage from their discussions when the exclusivity period ends on September 30 2009,” said the statement.
“This structure needed an approval from the government of South Africa, which has expressed its inability to accept it in the current form. In view of this, both companies have taken the decision to disengage from discussion,” it said.
Bharti hopes the South African government would review its position in the future and allow both companies to re-engage.
Bharti and MTN revived merger talks in May, a year after previous talks broke down over who would control a merged entity.
A merger would create an emerging markets giant with more than 200-million customers across India, Africa and the Middle East.
The talks had been extended twice and the current deadline was until Wednesday.
The deal faced scrutiny from regulators and politicians. South Africa is eager to retain MTN’s national character and had approached Indian authorities to consider a dual-listed entity, a structure the Indian laws currently does not allow.
Under the initial tie-up terms outlined in May, MTN and its shareholders would take a 36 percent economic interest in Bharti and the Indian firm would end up with 49 percent of MTN.
Bharti increased the cash component of its offer for that 49 percent stake to $10billion from a proposed $7.6-billion.