South Africa’s third-largest cellular operator Telkom has announced that it has terminated discussions about a potential acquisition with data-only provider Rain.
Telkom has been engaging in acquisition talks with Rain and MTN over the past year. In July 2022, Telkom and MTN disclosed that they were in talks, revealing that MTN had proposed to acquire Telkom in exchange for shares or a combination of cash and shares.
Rain later announced that it had proposed a merger deal with Telkom, which involved the potential acquisition of Rain for newly issued shares at Telkom.
However, according to media reports, Telkom denied the reports saying the announcement was made without approval. Rain ultimately retracted the announcement and later issued a formal and approved proposal.
Because of Telkom’s discussions with Rain, MTN walked away from the table, causing over a 20% drop in Telkom’s share price.
In a SENS update on Wednesday, Telkom advised its shareholders that discussions with Rain would not proceed, noting that the transaction is currently not feasible.
“Further to the SENS announcement dated 30 September 2022 in relation to a non-binding proposal received from Rain, Telkom shareholders are advised that Telkom and Rain have terminated discussions in relation to Rain’s proposal of the potential acquisition of Rain by Telkom for newly issued shares in Telkom.
“After initial discussions, but prior to any due diligence, the parties have decided that a suitable transaction is not possible at this time.”
The termination announcement sent the mobile operator’s shares soaring at lunch-time trade on Wednesday. Telkom shares were last quoted at R36.20, up 11.8% on the session.
Also read: Telkom’s share price nosedives as merger with MTN falls flat
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