With Bharti Airtel calling curtains on its attempts to acquire the South African telecom major, MTN, the company?s shares are likely to gain when the markets open on Monday. Quite in contrast, MTN shares are expected to take a beating.
Monday will be a day to watch out not only from the markets point of view but also because MTN will issue a statement telling its side of the story on the deal ending in a fiasco. It is expected that MTN will lay the blame on Bharti particularly since the latter has strongly blamed it for the fiasco. It is expected that MTN will point towards certain corporate governance issues leading to the failure of talks.
While, Bharti will also inform the exchanges its version has already been released to the media on Saturday.
Bharti?s stocks have been faling ever since reports started surfacing about its talks with MTN, basically because of the financial pressure in raising funds. The company?s shares had fallen by close to 12% from over Rs 900 per share last month to a low of Rs 817.60 on Thursday. On Friday, Bharti shares closed at Rs 836.8 on the Bombay Stock Exchange, a rise of 2.35% over previous close. By Friday there were some speculations that the deal may be called off.
Interestingly, MTN shares declined by 0.5% on Friday to 156.2 South African rands. During talks with Bharti, MTN?s share price had risen to a high of 160 rands. Before the company?s talks with Bharti surfaced its shares were trading at around 130 rands.
As is known, the country?s largest mobile operator, Bharti on Saturday pulled out of negotiations with MTN laying the blame on it for deviating from the originally agreed terms and presenting a completely different structure envisaging Bharti Airtel becoming a subsidiary of MTN and exchange of majority shares of the company held by the Bharti family and SingTel in exchange for a controlling stake in MTN.
As reported by FE, Bharti was forced to pull out from negotiations as MTN felt undervalued with other suitors showing interest and a couple of financial and political factors contributing to the deadlock.
