TMT
By 20 August, 2009

Indian telecom major Bharti Airtel Ltd has extended its merger talks with South Africa’s MTN Group until September 30, 2009. Earlier, the deal was supposed to be completed by August 31, 2009. This is the second extension of the talks, which were first announced in late May this year and were initially due to end on July 31.

“Discussions regarding the potential transaction continue to progress satisfactorily,” stated Bharti Airtel in its communiqué to stock exchange. “No decision or agreement to acquire any share or implement the potential transaction has yet been made by the board of either Bharti or MTN and the discussion may or may not lead to any transaction.”

A merger, if happens, will create an emerging markets giant with more than 200 million customers across India, Africa and the Middle East. According to the proposed $23 million cash and share swap deal, MTN and its shareholders would take 36% stake in Bharti while the Bharti would end up with 49% stake in MTN.

Bharti Airtel restarted talks with MTN in May this year. Sunil Mittal-led firm was in in talks for a possible deal with MTN in 2008, which ended after Anil Ambani led Reliance Communications wooed the latter.

Reports have suggested that Bharti Airtel needs to sweeten the offer for MTN shareholders in order to close the deal. Bharti may increase its offer by between 5 and 10%, reports suggest.

Bharti is looking at an overseas loan component of around $3-$3.5 billion and a rupee funding of around $1.5-$2 billion for the deal, Economic Times reported earlier this week. 

Barclays, Bank of Tokyo-Mitsubishi, Calyon, Citi, DBS, HSBC, JP Morgan and Sumitomo Mitsui Banking Corporation have expressed interest in funding the deal. State Bank of India and Punjab National Bank are interested funding the rupee loan.

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