Ambani to seek 40%+ of MTN

17 Jun 2008

According to the Financial Times, Anil Ambani, chairman of India’s Reliance Communications (RCOM), is considering buying more than 40% of South African-based wireless group MTN. According to the London broadsheet, Mr Ambani is looking at how he could maximise an ‘in-effect controlling position’ in MTN by seeking to persuade the South African mobile operator’s shareholders to waive their right to a tender offer. Until now it has been thought Mr Ambani would limit himself to a 34.9% stake in MTN, because if he went any higher he would be obliged under South African laws to make an offer to buy out the African company’s other shareholders. But unnamed sources close to the matter claim that Mr Ambani is now looking at the case for a ‘whitewash’ procedure under which MTN’s shareholders would vote on whether to waive their right to a tender offer. If the shareholders agreed, Mr Ambani could end up owning 40%-45% of MTN.

On 26 May RCOM and MTN began 45 days of exclusive talks on a possible deal. Several transaction structures are believed to have been examined and no conclusions reached. Mr Ambani is reported to be seeking to engineer a de facto takeover of MTN under which he would swap most of his 66% in RCOM for a near-controlling stake in the enlarged group. RCOM would then become a subsidiary of MTN.

India, South Africa, MTN Group, Reliance Communications (RCOM)