Wednesday, September 23, 2009

Bharti Makes Management Offer to Sweeten MTN Deal

In an attempt to seal the MTN deal Bharti Airtel is offering to retain the top management of MTN for at least three years, giving the option of an all-cash offer to minority holders of MTN, and more shares in itself for the same money, which would push up the cost of acquisition for Bharti, The Economic Times said today.
The report said Bharti Airtel is making a slew of last-minute concessions to sew up a deal with MTN, as it awaits a political push to take the planned tie-up past the hurdle of national pride in South Africa.
The deal would lead to MTN's chairman Cyril Ramaphosa, CEO Phuthuma Nhleko and forthcoming CFO Nazir Patel (current CFO RD Nisbet to leave the company next month) retaining their positions for at least three years which may pacify the South African government which is keen on retaining the company's national character.
The Indian company will also maintain the status quo of a 49% stake in MTN for at least five years. A Bharti spokesman declined to comment on the revised structure.
The report further explained that a delegation from the South African government led by Ismail Momoniat, a senior official in South African treasury, are meeting the Indian government officials on Tuesday to lobby for the deal. Sunil Mittal, chairman of Bharti may meet Prime Minister Manmohan Singh who is expected to talk to South African President Jacob Zuma during the G20 talks to facilitate the transaction.
The latest offer also gives MTN a 27% stake in Bharti Airtel, compared to 25% when the contours of the deal were first unveiled in May. MTN will also pay $2.9 billion in cash to Bharti. The deadline to conclude a deal is Sept 30.
MTN's minority shareholders will now have the option to take $13 billion in cash for a 36% stake in the company instead of the earlier proposed $7 billion in cash and $6 billion worth of Bharti Airtel shares.

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