MTN offers to acquire Investcom for US$5.5 billion

MTN had been rumoured to be interested in Investcom last year, though nothing resulted from that link. While Investcom executives had since insisted the company was committed to remaining an independent operator, industry sources widely speculated that Investcom was likely to fall prey to acquisition.

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By  Tawanda Chihota Published  May 2, 2006

South Africa’s MTN Group has announced a US$5.5 billion takeover bid for London and Dubai-listed mobile operator Investcom, just weeks after Investcom had told CommsMEA it was committed to remaining an independent mobile operator. The two companies have reached agreement on a transaction through which the MTN Group will offer to acquire the entire issued share capital of Investcom. The recommended offer, at US$3.85 per share (translating into US$19.25 per Global Depositary Share) will be an all cash offer, with shareholders also being given a cash and share alternative. This represents a 27% premium to the closing price of Investcom’s GDSs on April 28, 2006. Investcom’s controlling shareholder, M1 Limited, which currently owns approximately 70.6% of the ordinary shares of Investcom, has irrevocably undertaken to accept the cash and shares alternative and would become a shareholder in the MTN Group. M1 Limited has agreed to a lock up of 14 months on the MTN Group ordinary shares it will receive in the offer. The transaction will make the enlarged group the clear leader in Africa and the Middle East, operating mobile networks in 21 countries, covering a population under licence on a combined basis of approximately 488 million people and serving in excess of 28 million subscribers. Investcom is invested in mobile operations in Africa, the Middle East and Europe, and counted approximately 4.9 million mobile subscribers across Benin, Cyprus, Ghana, Guinea Bissau, Liberia, Sudan, Syria and Yemen at the end of 2005. It recently launched commercial services in Guinea and has been awarded a GSM licence in Afghanistan. There are no overlapping operations between MTN and Investcom and the deal consolidates the MTN Group’s increased interest in the Middle East; with presence in Iran, Syria, Yemen and Afghanistan and management presence in Dubai. MTN had been rumoured to be interested in Investcom last year, though nothing resulted from that link. While Investcom executives had since insisted the company was committed to remaining an independent operator, industry sources widely speculated that Investcom was likely to fall prey to acquisition. “In my view, Investcom could be more subject to acquisition than establishing its own position,” said Martin Pieters, Celtel International CEO. “It’s a typical example of a group that could be taken over or merged with another to form a bigger entity.” However, speaking to CommsMEA last month, Niam Kawas, Investcom’s executive director for corporate said the company was committed to following its own strategy, which included interest in the forthcoming licensing opportunities in Saudi Arabia and Iraq. Investcom had also been linked to the acquisition of Luxembourg-based mobile operator Millicom International Cellular, but today announced the withdrawal of its non-binding offer to purchase the entire issued share capital of Millicom.

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