MTN
MTN
MTN - MTN Group Limited - Cautionary Announcement
MTN Group Limited
(Incorporated in the Republic of South Africa)
Registration Number 1994/009584/06
Share code MTN
ISIN ZAE000042164
("MTN" or "the Company")
CAUTIONARY ANNOUNCEMENT
Shareholders are advised that, whilst no decisions have yet been made to
enter into or implement any particular transaction, MTN Group Limited ("MTN")
and Bharti Airtel Limited ("Bharti") are currently exploring a potential
transaction whereby MTN and its shareholders would acquire, pursuant to a
scheme of arrangement, an approximate 36% economic interest in Bharti, of
which 25% would be held by MTN with the remainder held directly by MTN
shareholders, and Bharti would acquire an approximate 49% shareholding in
MTN. Bharti and MTN have agreed to discuss the potential transaction
exclusively with one another until 31 July, 2009.
The potential transaction between Bharti and MTN would create a leading
telecommunication service provider group aligning Bharti`s market leading
Indian business with MTN`s market leading African and Middle Eastern
operations. The potential transaction would also represent a significant
development in South-South cooperation between India and South Africa. The
broader strategic objective would be to achieve a full merger of MTN and
Bharti, as soon as it is practicable to create a leading emerging market
telecom operator which today would have combined revenue of over USD 20
billion and a combined customer base of over 200 million.
The discussions contemplate that the potential transaction, which would be
achieved through a scheme of arrangement, would include the following
principal elements:
- MTN would acquire approximately a 25% post-transaction economic interest
in Bharti for an effective consideration of approximately USD 2.9
billion in cash and newly issued shares of MTN equal to approximately
25% of the currently issued share capital of MTN
- Bharti would acquire approximately 36% of the currently issued share
capital of MTN from MTN shareholders for a consideration of ZAR 86.00 in
cash and 0.5 newly issued Bharti shares in the form of Global Depository
Receipts ("GDRs") for every MTN share acquired which, in combination
with MTN shares issued in part settlement of MTN`s acquisition of
approximately a 25% post-transaction economic interest in Bharti, would
take Bharti`s stake to 49% of the enlarged capital of MTN. Each GDR
would be equivalent to one share in Bharti and would be listed on the
securities exchange operated by JSE Limited
- Bharti would have substantial participatory and governance rights in MTN
enabling it to fully consolidate the accounts of MTN
- MTN`s economic interest in Bharti would be equity accounted and would
have appropriate representation on the Bharti Board
The potential transaction, when completed, would be expected to create value
for MTN shareholders due to, among others, synergistic benefits and a further
diversification of MTN`s income streams into the fast growing and relatively
under penetrated Indian market. The potential transaction is also expected to
create value for Bharti shareholders, including going forward MTN and MTN
shareholders, due to, among others, synergistic benefits and further
diversification of Bharti income streams into the fast growing and relatively
under-penetrated African and Middle Eastern markets.
MTN would continue to be listed on the securities exchange operated by JSE
Limited and would be the primary vehicle for both Bharti and MTN to pursue
further expansion across Africa and the Middle East while Bharti would be the
primary vehicle for both Bharti and MTN to pursue further expansion in India
and Asia. The implementation of the potential transaction would not result in
any job losses in South Africa. MTN remains fully committed to implementing
MTN`s proposed BEE deal, as set out in its announcements on SENS on 15
December 2008, 18 February 2009 and 27 March 2009. MTN would also have
certain rights to increase its economic interest in Bharti in the future.
The discussions, which may have a material effect on the price of MTN`s
securities if successfully concluded, are at an early stage and may or may
not lead to any transaction. Shareholders are further expressly cautioned
that the structure and terms of the potential transaction may be adjusted to
reflect, among others, further discussions between the parties and
discussions with lending banks and applicable regulators. No decision or
agreement to acquire any shares or implement the potential transaction
outlined above has yet been made by the Boards of either MTN or Bharti.
Accordingly, shareholders are advised to exercise caution when dealing in the
Company`s securities until a further announcement is made.
Fairland
25 May 2009
Financial Advisors
Bank of America Merrill Lynch
Deutsche Bank AG
Sponsor
Deutsche Securities SA (Pty) Limited
Legal Advisors
Freshfields Bruckhaus Deringer LLP
Webber Wentzel
Date: 25/05/2009 07:05:11 Produced by the JSE SENS Department.
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