The much talked about major telecoms deal between Telkom and Rain has broken down as the two companies have walked away from a transaction that could have seen Telkom buying the wireless broadband upstart.
The news sent Telkom’s shares soaring higher in lunchtime trade in Johannesburg on Wednesday on investor expectations that the collapse of the talks could rekindle an approach by the partially state-owned company’s rival MTN Group.
Telkom’s shares were last quoted at R36.20, up about 11% on the session.
MTN and Telkom had been in preliminary discussions, but the former walked away when the latter indicated it was willing to engage in a discussion with Rain about a deal. Although MTN had said it was not after exclusivity in the talks, company insiders felt having Rain involved in discussions would unnecessarily complicate what would already be a difficult deal to get across the line.
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Telkom advised its shareholders on Wednesday that the talks with Rain, which involved the potential acquisition of Rain for newly issued shares in Telkom, would not proceed. “After initial discussions, but prior to any due diligence, the parties have decided that a suitable transaction is not possible at this time,” Telkom said.
“Telkom continues to execute its strategy to unlock value for shareholders and will provide an update on progress in this regard in due course.”
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry