"In its existing form, the Bharti-MTN deal will become more complicated because of this amendment. The dynamics have changed and both MTN and Bharti will have to go back to the drawing board to see the deal through," said SMC Capitals Equity head, Jagannadham Thunuguntla.

1. India's new takeover norms may scuttle Bharti-MTN deal
IANS
Published on Tue, Sep 22, 2009 at 21:52
Mumbai: The $23-billion equity swap deal proposed by Bharti Airtel and South Africa's MTN may hit
turbulent weather with India's capital markets watchdog amending the merger and takeover norms
involving international transactions, experts said on Tuesday.
In a move that surprised the corporate sector, the Securities and Exchange Board of India (SEBI)
said on Tuesday that the mandatory open offer norm will be triggered even if the overseas equity
holdings, in the form of global depository receipts or American depository shares, exceed 15 per
cent of the total paid-up capital of the target company.
Earlier, the open offer was mandatory only when the acquisition of shares in the target company
exceeded 15 per cent during transactions entered into within the country, either through stock
market operations or through preferential deals.
In the Bharti-MTN deal, the two sides proposed to exchange shares in addition to payout of cash
that exceeds 15 per cent.
Bharti had proposed to buy 36 per cent of the South African company by offering shareholders half a
Bharti share, whereas MTN was to get a 25 per cent stake in the Indian telecom major for $2.9
billion by issuing global depository receipts.
"In its existing form, the Bharti-MTN deal will become more complicated because of this amendment.
The dynamics have changed and both MTN and Bharti will have to go back to the drawing board to
see the deal through," said SMC Capitals Equity head, Jagannadham Thunuguntla.
As per the existing provisions of the SEBI takeover code, no acquirer can buy shares of 15 per cent
or more in a listed company without making an open offer to acquire a minimum of 20 per cent of
such listed company's shares from the public shareholders.
Announcing the changes in the takeover code, SEBI Chairman C B Bhave also said that there would
be no retrospective effect on earlier deals because of this amendment.
MTN DEAL GETS COSTLIER, BHARTI STOCK DOWN 3.28 pc

2. The scrip of Bharti Airtel fell 3.28 per cent on the Bombay Stock Exchange (BSE) at end of trade on
Tuesday following reports that the company may have to sweeten its offer for South African telecom
company MTN.
According to reports, Bharti has offered MTN a 27 per cent of its stake for the same money instead
of the 25 per cent proposed earlier.
The Bharti scrip, which opened at Rs 449, fell Rs 14.50 or 3.28 per cent to Rs 428.10. It, however,
recouped some losses moving up from its intra-day low of Rs 426.
Under the offer earlier, Bharti had proposed to buy 36 per cent of the South African company by
offering shareholders half a Bharti share, whereas MTN was to get a 25 per cent stake in the Indian
company for $2.9 billion and through issuing new shares equal to 25 per cent of its share capital.
The potential transaction between the two companies is proposed to create a leading telecom
service provider group, aligning Bharti's market-leading Indian business with MTN's growing African
and Middle Eastern operations.
MTN's biggest shareholder, with 21 per cent, is the Public Investment Corp, a pension fund owned
by the South African government.
The country's treasury and banking officials are supposed to meet Indian government officials
Tuesday to discuss foreign exchange control implications of the planned tie-up between MTN and
Bharti Airtel.
One of the major contentions in the talks is the dual listing demand made by the South African
government to India's Finance Ministry.