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Bharti shares jump as MTN deal jinx ends
South Africa’s MTN may be having a poor track record in merger and acquisitions but its share price has always gone up whenever it has initiated merger talks.
South Africa’s MTN may be having a poor track record in merger and acquisitions but its share price has always gone up whenever it has initiated merger talks.
On the contrary, share price of its now given-up Indian suitors — Bharti and Reliance Communications — have gone up whenever the talks failed, an indication that investors didn’t have confidence in the success of the merged entity.
Bharti shares shot up on Thursday after it called off its Rs. 110,000-crore deal talks with MTN after objections from South African government that derailed the merger.
South African Reserve Bank Governor Tito Mboweni said in Port Elizabeth, “We don’t like the application” that MTN submitted. “MTN must remain a South African company. It’s a very important asset. The chairman, the chief executive officer, the chief operating officer must reside in South Africa. This is the first official statement by a South African government official why the deal failed.
The MTN share went up by 11 per cent in May-August, 2009, during negotiations. Bharti’s share price, however, fell by 5.4 per cent on May 25, when the announcement was made.
Bharti’s share rose by 3.9 per cent today as the deal failed.
In May 2008, MTN’s share price went up by 11 per cent on an announcement of discussions with Bharti Airtel for merger. Bharti’s shares, however, fell by 5 per cent.
In October 2007, MTN share prices jumped by 34 per cent in two months – October and November - on reports that it was in negotiations with China Mobile. The company later denied these reports as rumours.
