South Korea’s KT Corp has reached an agreement to buy a 20% stake in South African telco Telkom.
The deal value is less than previously expected with Telkom saying that KT will pay R25.6 (US$3.25) a share, or US$346m in total, for the 20%…
South Korea’s KT Corp has reached an agreement to buy a 20% stake in South African telco Telkom.
The deal value is less than previously expected with Telkom saying that KT will pay R25.6 (US$3.25) a share, or US$346m in total, for the 20% stake.
The companies had previously said that Telkom would issue new ordinary shares at R36.06 (US$4.70) each, or a total value of approximately US$495m, which KT would acquire in cash.
But “since the first cautionary announcement on 14 October 2011, there have been a number of developments concerning Telkom that have materially impacted the Telkom share price,” the South African company stated on 8 May.
However, Telkom said that the proposed issue price still represents a 9.9% premium to the closing price of its ordinary shares of R23.30 on the Johannesburg Stock Exchange on 4 May 2012.
The transaction is conditional upon “resolution of the current investigation by the Competition Authorities into the competition complaints against Telkom to the satisfaction of KT.”
Telkom may reportedly have to pay a US$417m fine for alleged abuse of market dominance. The company has denied the charges.
The South African telco – which is 39.8%-owned by the South African government, 10.9% by Public Investment Corp., itself controlled by the government, while 47.3% is in free float – has hired Deutsche Bank as lead financial adviser and transaction sponsor, UBS as sponsor, Deloitte as co-adviser and Eversheds as legal adviser.
