Public offer not mandatory in Bharti-MTN deal: SEBI
08 Jul 2009
Ending a period of doubt, the Securities and Exchange Board of India yesterday clarified that South African telecom service provider MTN and its shareholders can buy 36 per cent in India's Bharti Airtel via global depositary receipts without having to make a mandatory open offer.
Bharti and MTN are in private talks over a complex deal that could lead to a full merger, creating the world's third largest wireless group, with more than 200 million subscribers and combined revenue of $20 billion (Rs96,380 crore). If it goes through, it would be one of the biggest mergers and acquisitions of the year.
Bharti had sought clarifications from the regulator on Indian takeover rules that require an acquirer of 15-per cent equity stake or more to make an open offer for another 20 per cent from other shareholders.
"MTN and / or its shareholders would be required to comply with the requirements of open offer only upon conversion of the GDRs into equity shares with voting rights," SEBI said.
The SEBI letter, which was dated 22 June but made public only yesterday, also said Bharti had proposed to acquire a 49-per cent holding in the South African firm directly or through its affiliates.
Bharti announced in May that the two groups were negotiating a structure in which the former it would pay 0.5 newly issued GDRs and Ssouth Afriacn Rand 86 for each MTN share in exchange for 49 per cent of the enlarged capital of the South African operator. MTN in turn will pay $2.9 billion in cash and issue new shares in exchange for a 25-per cent interest in Bharti.
