It is all systems go for Nippon Telegraph and Telephone's (NTT's) R24.2 billion buyout of London- and Johannesburg-listed Dimension Data, as the deal receives final clearance from the Committee on Foreign Investment in the US (CFIUS).
The final regulatory hurdle saw the deal cleared of posing any threat to US national security. The company yesterday confirmed CFIUS had concluded its review of the deal and found there to be no unresolved US national security concerns with respect to the offer.
With a number of international financial and competition approvals, as well as approval from the South African Reserve Bank and South African finance minister Pravin Gordhan, the deal has satisfied all of the necessary regulatory obligations.
The companies initially hoped to have the deal wrapped up by October and steady progress with regulatory approvals bodes well for meeting this deadline.
Checklist
A deal of this magnitude faces many regulator hurdles, including the expiration of the waiting period under the US Hart-Scott-Rodino Antitrust Improvements Act, of 1976 (as amended), announced by NTT and DiData on 12 August.
The offer has also obtained antitrust clearance from the European Commission, announced by the companies on 19 August.
The deal was subject to notification from the Foreign Investment Review Board that there are no objections to the offer under Australia's foreign investment policy, which was subsequently obtained on 19 August.
NTT and DiData then announced the approval of the offer by the Exchange Control Department of the South African Reserve Bank and the South African minister of finance on 26 August.
The South African Competition Tribunal approved the offer on 23 September.
The companies also confirmed with the Independent Communications Authority of SA that the offer does not require its prior approval.
Pending investigation
Although the deal is making steady progress towards being finalised, it has not been without controversy, as the Financial Services Board (FSB) will look into whether leaked information caused suspicious trading in DiData shares just before the company announced the acquisition.
In the days just before the announcement, DiData shares changed hands more rapidly than usual.
On 12 July, 1.6 million shares changed hands, while another 5.2 million were traded the next day. On 14 July, the day before the announcement, 3.9 million trades took place, while on the day the news was published, 37.6 million stocks were exchanged.
The FSB is investigating the volume of shares traded between 12 July and the day the sale was announced. Executive director of the board's market abuse division, Gerhard van Deventer, says an investigation will be launched shortly into the suspicious trade activity.
“There are certain transactions that seem to have been very well timed,” notes Van Deventer. He says the trades, unless they were lucky purchases, could be a contravention of the Securities Services Act.
In terms of the Act, it is an offence to disclose sensitive information that could have an effect on a company's share price before the market is informed, or to use such information to benefit from a movement in the share price.
Should the FSB find evidence of insider trading, or leaked information, the enforcement committee will determine what financial penalty could be levied against the guilty party, Van Deventer says. He adds that the fines that can be imposed are “unlimited”.
Dimension Data says it is aware of the investigation by the FSB and supports the board in its efforts.
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