Telkom bid still on the cards

By Staff Writer for Telkom
Johannesburg, 15 Jul 2008

Telkom this morning renewed a cautionary notice indicating that discussions relating to a proposed bid by a consortium led by Mvelaphanda Holdings (Mvela) are continuing.

Telkom confirmed in a cautionary notice on 2 June that it had received a letter from a consortium including Mvela and affiliated funds of Och-Ziff Capital Management Group stating its intention to make an offer for the entire issued share capital of Telkom.

The offer would be made only if Telkom met a number of pre-conditions, including confirmation by Telkom's board that the telco's entire 50% stake in mobile operator Vodacom would be unbundled.

The telco also mentioned that it had received a non-binding proposal from a Vodafone subsidiary to acquire part of Telkom's stake in Vodacom. It pointed out that these talks, which began on 14 May, were independent from the Mvela proposal.

Telkom spokesman Pynee Chetty said last week that talks were under way, but would not comment further, other than to say that cautionary notices lapse after six weeks. This would mean that the 2 June notice would have been in effect until the end of yesterday.

The group says in its latest statement: "The discussions with Vodafone and independently with the consortium are still ongoing and shareholders are therefore advised to continue to exercise caution when dealing in Telkom securities until a further announcement is made."

Analysts have said they are in the dark about the talks, with the companies having managed to maintain a strong level of secrecy around the matter. In terms of JSE regulations, Telkom is not allowed to comment further on the matter when trading under a cautionary.

The Telkom share, which closed at R131 on the JSE yesterday, was trading at R132.60 at midmorning today. Mvelaphanda Group was trading unchanged at R6.