MTN’s direct shareholding in Bharti Airtel would be less than 15 per cent, even though its ‘economic interest’ may be 36 per cent. This is due to the takeover regulations of the Security and Exchange Board of India (Sebi).
Sebi’s takeover regulations get triggered the moment an entity touches the threshold of 15 per cent stake in a company, and make it mandatory for the acquirer to make an open offer to shareholders for buying a minimum of additional 20 per cent stake in the target company.
According to an Airtel spokesperson the $23 billion deal would be structured in a manner that does not trigger Sebi’s takeover regulations. “We believe that the current proposed transaction structure will not trigger a mandatory tender offer in India,” a Bharti Airtel spokesperson said in response to a query by Hindustan Times on the possibility of MTN having to make an open offer in India.
On Monday, Airtel announced the proposed deal, under which it would own 49 per cent in MTN and in turn, MTN and its shareholders would own 36 per cent, of which 25 per cent would be held by MTN.
A day after Indian telecom major Bharti Airtel renewed efforts to acquire a 49 per cent stake in South Africa’s leading wireless-services provider MTN, shares of both the companies registered losses of as much as 5 per cent on the bourses.
Bharti Airtel today registered the second consecutive fall of over 5 per cent and settled the day at Rs 770.40 on the Bombay Stock Exchange. Meanwhile, shares of MTN were trading at 125.20 rand, down 3.62 per cent on the Johannesburg Stock Exchange.