SINGAPORE -- The proposed $24 billion merger between India's Bharti Airtel Ltd. and South Africa's MTN Group Ltd. may be jeopardized by hurdles erected by the governments in Johannesburg and New Delhi, a person familiar with the situation said Wednesday.
Demands by the South African government for a dual listing and a change of rules by the Indian market regulator will likely delay the deal, or potentially end it.
"The announcements for an in-principle agreement are ready to go. But the politicians have weighed in big time in the past few days. It's a bad development, and it could derail the agreement," the person said.
"About two weeks ago the South African government told MTN that it shouldn't be delisted from the local exchange as part of the deal. It wants a dual listing, but Indian regulations prohibit Bharti from a dual listing."
Earlier this month, Bharti sweetened its offer for a 49% stake in MTN by $900 million to $14 billion in cash and stock and agreed to retain MTN's senior management for at least two years.
Bharti also agreed to sell to MTN a 36% stake for $10 billion, which was the South African firm's original offer in May. The two companies have been in exclusive talks since May and have twice extended the exclusivity period, which expires at the end of September.
The Securities and Exchange Board of India said Tuesday existing takeover rules on triggering an open offer now would be applicable for entities acquiring global depositary receipts or American depositary receipts with voting rights in an Indian firm.
MTN may then need to make a mandatory offer for another 20% of Bharti on top of the original 36%. That would push the foreign investment limit in Bharti over the 74% limit as there are other foreign investors on the Indian mobile operator's share register.
Bharti and MTN officials are scrambling to solve the regulatory issues before the Sept. 30 deadline.
Write to Costas Paris at costas.paris@dowjones.com and Se Young Lee at vincent.lee@dowjones.com
Source: http://online.wsj.com/article/SB125368914470433387.html
Document WSJO000020090923e59o009kq
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