Reliance Communications may rope in PE firms for MTN link-up: report

04 June 2008

Reliance Communications chairman Anil Ambani is trying to tie up with private equity funds in his bid to link up with South African communication giant MTN.

Ambani, who could end up as the single largest shareholder of the combined entity, with a 35-per cent stake, is also likely to become its chairman, the Financial Times reported.

Reports said Ambani is pushing for a controlling position in the merged entity, even as the deal would be structured as a reverse takeover by MTN.

''The merger talks are focused on the possibility of Ambani swapping most or all of his 66 per cent stake in Reliance for shares in MTN. He could end up with a 34.9 per cent stake in MTN," the report said.

Ambani, the report said, could also be co-chairman of the enlarged group alongside Cyril Ramaphosa, MTN's current chairman, while MTN's chief executive Phuthuma Nhleko could hold the same position following a merger with Reliance.

The stock swap is expected to value MTN at more than R175 ($23) a share. MTN, however, would be required under Indian regulations to make an open offer to Reliance's minority shareholders for up to 20 per cent of the company's stock.