MTN - Reliance Communications deal to be announced on July 6th?

The latest industry buzz is that a deal between Anil Ambani’s Reliance Communications (RCom) and South Africa’s MTN may be announced on Sunday, July 6, which is the death anniversary of Dhirubhai Ambani.

The speculation has gained currency because, in 2006, Anil Ambani had announced his interest in acquiring a controlling stake in Hutch Essar on the birth anniversary of his father.

The 45-day exclusivity period for talks between RCom and MTN ends on July 8, and therefore, an announcement (either yes or no) could be announced anytime by then, sources pointed out. An extension of the exclusivity period, by as much as 30 days, cannot be ruled out either.

Following the feud between the Ambani brothers, the deal structure is believed to have been changed between MTN and RCom, as first reported in this newspaper on June 27. Instead of a proposed merger between the two, RCom is now looking at acquiring below 35% stake in MTN, sources said. RCom may tie up with investors, including sovereign wealth funds, to buy a stake in MTN.

Media reports have, however, indicated a share swap also. This would give the Anil Dhirubhai Ambani Group the largest shareholding in MTN, thereby making RCom a subsidiary of MTN.

The merger talks between South Africa’s leading telco MTN and RCom seemed to be heading for a breakdown recently after Mukesh Ambani’s Reliance Industries (RIL) sent a letter to MTN saying that his company had the first right of refusal on any deal involving sale of RCom. Subsequently, the share price of Reliance Communications fell significantly.

via DNDA