Bharti Airtel and MTN can’t seem to decide

Bharti Airtel and MTN have still not managed to get their merger act together and don’t expect to do so any time soon. They have 10 days to go for the August 31 deadline for exclusive talks to end. But Bharti Airtel today announced an extension of talks till September 30. It is unlikely that the two sides are not able to agree on the price, by now they would have called off the talks if price was a sore point

Two reasons come to mind. One, both parties have to convince some of their large institutional shareholders. A cross-border merger may leave them with a reduced holding in the consolidated entity. Another possibility is regulatory issues, either to do with the sector or the transaction itself. The transaction involves both companies holding stakes in each other and existing laws may not allow them to do it directly. They will have to set up separate special purpose vehicles for it and since part of the consideration is in the form of shares, they may even consider issuing depositary receipts to each other. The transaction seems set to be a complex one.

The announcement to the Bombay Stock Exchange can be read here.

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