A USD5.3 billion bid by China Mobile for Millicom International Cellular (MIC), which would have been the largest overseas acquisition by a Chinese company, fell through yesterday as the Luxembourg-based telco announced it had been unable to agree terms with its suitor. Shares in Millicom plunged by USD11.91, or 26%, to USD33.52 by lunchtime in New York, after the group said it had concluded that the state-owned Chinese operator ‘[would] not be in a position within an acceptable timeframe to make a binding offer that is suitably attractive . . . or sufficiently certain of closing."
Millicom’s decision to end the sale process came after China Mobile had conducted weeks of due diligence on a USD48-a-share bid. Advisers had hoped a deal could be finalised as early as a month ago, but negotiations dragged on, sapping the Luxembourg-based company’s confidence in China Mobile’s ability to complete a transaction. The deal’s collapse, just as Millicom’s advisers were about to board flights for Beijing to wrap up the final details, could affect foreign companies’ willingness to pursue similar transactions with state-owned Chinese groups. In a statement Millicom said ’The board of directors remains confident in the independent future of the company.’ Kinnevik, the Swedish investment company that owns just under 40% of Millicom’s shares, also said it supported the decision to end talks.