India's Reliance Communications and South Africa's MTN are negotiating the ratio for a share swap, the Economic Times said today, aimed at creating a global top-10 telecoms firm.
"Although both are learnt to have agreed on the broad contours of the deal, they are yet to decide the swap ratio," the newspaper said, citing unidentified sources.
Media reports have suggested the two firms, which have begun due diligence, were discussing a cash-and-stock swap deal where MTN would take a stake of up to 74% in Reliance Communications, and Reliance chairman Anil Ambani would become the biggest shareholder in MTN.
Ambani wants the ratio at 66 MTN shares for 100 Reliance Communications shares, while MTN wants it at 51 MTN shares for 100 Reliance shares, the Economic Times said. The companies are in favour of keeping the existing management unchanged in most geographies, the paper said.
A team from Reliance Communications, India's number two mobile operator, is now in Johannesburg, and is expected back in Mumbai on Tuesday, the paper said.
A spokesman for Reliance Communications declined comment.
The Business Standard, citing sources close to the development, said the share-swap ratio was yet to be decided, and due diligence was expected to be completed by next week.
A source close to the development said last week Reliance Communications had engaged Deutsche Bank for the possibility of roping in private equity firms for part of the deal.
Blackstone, Carlyle and Apax were interested, the source had said.
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