The short engagement between Bharti Telecom and MTN is officially off. The merger deal, which had been forecasted to create the world?s sixth largest telecom company, has ostensibly been rejected by Bharti telecom. Bharti claims that the final offer put forward by MTN was a radically different one from that agreed to some days ago. MTN, in its revised offer, wanted to incorporate Bharti as a subsidiary. The revised deal required the Mittals and Singtel to surrender a majority of shares in Bharti to MTN in return for a controlling stake in MTN. This was unacceptable to Sunil Mittal and SingTel as well. It would likely have run afoul of India?s law on FDI in telecom?it is capped at 74% while the merged entity would have probably had more. Anyhow, it is the highest profile ?loss? suffered by an Indian firm in an overseas takeover bid. There have been earlier instances of the failure of Indian firms to win abroad?Orient Express hotels turned down the Tata group and Taittinger turned down Vijay Mallya?but these deals were small compared with Bharti-MTN. But India Inc needs to get used to the idea of losing some while winning others?that?s the way it works in a market economy.
Of course, Indian firms can argue that there were a number of non-economic reasons behind their failed bids. In the Taittinger case, French nationalist sentiment prevented even the determined Vijay Mallya from making progress. Orient Express Hotels made some disparaging comments about the ?Indian firm? which was bidding to take it over. Even in the case of Bharti-MTN, political sentiment is rumoured to have played a part?the original deal was turned down by chairman of the MTN Board Cyril Ramaphosa, who is a prominent black politician and possible candidate for the presidency of South Africa?some argue that he did not wish to see an ?African? brand disappear under the Airtel umbrella. If all of this is true, and to an extent it always is in transnational mergers and acquisitions, Indian firms have reason to be grumpy. However, we must look at our own policies and sentiments with regard to foreign takeovers of Indian firms?does anyone remember the furore over BAT?s proposed takeover of ITC or SIA-Tata?s proposed takeover of Air India? Surely, we can?t expect from others what we don?t offer them. Time, perhaps, for a rain check on our nationalist sentiments.