HT Image
HT Image

Brothers’ tiff may cancel RCom-MTN merger

MTN seems to have developed cold feet after Mukesh Ambani-led Reliance Industries’ claim that it has first right to buy any RCom shares, reports HT Correspondent.
None | By HT Correspondent, Mumbai
UPDATED ON JUL 09, 2008 12:44 AM IST

Merger talks between Anil Ambani-controlled Reliance Communications (RCom) and South African telecom major MTN appear to have hit a snag. The agreement to exclusively discuss a merger with RCom was not being extended, PTI reported, quoting a source familiar with the development.

The deadline expired on Tuesday night. There was, however, no confirmation either from MTN or RCom, the report said.

RCom started negotiations with MTN on May 26 soon after Bharti Airtel called off its merger talks with the Johannesberg-based telecom giant. The merger could have created one of the top 10 telecom firms in the world with a subscriber base of 11.5 crore and revenues close to Rs 60,000 crore.

Maintaining a stoic silence over the fate of the talks with RCom, MTN was likely to convene a board meeting on Thursday to discuss the issue, said PTI.

Though both the firms were close to finalising a merger through a share-swap, Mukesh Ambani-led Reliance Industries wrote to MTN and RCom on June 12, claiming that it had first right to buy any RCom shares Anil wished to let go of.

Neither the Anil Dhirubhai Ambani group nor Reliance agreed to comment.

MTN seems to have developed cold feet after Reliance’s claim, according to investment banking sources close to the transaction. On July 3, RCom wrote to market regulator the Securities and Exchange Board of India seeking an intervention into the fall in prices of RCom shares.

The scrip was down 1.05 per cent to Rs 415.40 on the Bombay Stock Exchange on Tuesday. The share price crashed by 23.5 per cent since the announcement of the merger talks.

Story Saved