MTN buys deal time

The group had initially said it had entered into exclusive negotiations with Reliance for a 45-day period, which expired at the close of business yesterday.

But, it had been widely anticipated that the parties would give themselves more time to potentially finalise the deal, particularly after a feud between brothers Anil and Mukesh Ambani that seems it could derail the transaction.

The new deadline is 21 July.

Anil Ambani is the chairperson of Reliance Communications, while his brother Mukesh of Ambani Industries claims he has a preemptive right to buy control of the mobile telecoms company if it changes hands. This allegedly came about when the brothers were dividing their late father's business interests.

But, Anil Ambani previously called this claim "legally and factually untenable, baseless and misconceived".

MTN shares have fallen from around R160 a share, to almost R120 a share in the uncertainty around whether an Indian deal would come off. There has, however been some recovery this week on renewed hopes for a deal panning out. The counter closed at R130 on Tuesday.

Various reports initially suggested that Ambani could swap his stake in Reliance for a 30% share of the MTN group once the companies had been combined, but more recent reports claim Ambani has sought private equity and other financial support and is vying for a 51% stake in the enlarged entity.

MTN has not, however, given any detail on what form the deal could take.

MTN urged its shareholders this morning to continue to trade with caution in its shares until a further announcement is made. But, it also cautioned that there was no certainty that the discussions would result in a transaction.

The shares seem likely to respond positively to the extension of the talks this morning.

- Fin24.com