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BCX takeover moves ahead

Nicola Mawson
By Nicola Mawson, Contributing journalist
Johannesburg, 25 Aug 2014
Business Connexion expects an indication of whether Telkom's offer will succeed by November, notes BCX deputy CEO Vanessa Olver.
Business Connexion expects an indication of whether Telkom's offer will succeed by November, notes BCX deputy CEO Vanessa Olver.

Telkom has lodged merger filings with local and other regulatory entities in several countries as its R2.67 billion bid to buy Business Connexion (BCX) moves ahead.

The telco notes it lodged papers at the beginning of this month locally, followed a few days later by fillings with authorities in Botswana, Tanzania, Namibia and the Common Market for Eastern and Southern Africa.

BCX deputy CEO Vanessa Olver notes a "constructive" meeting with the Competition Commission took place last week, although - because of the nature of the merger - the process is likely to take some time.

Competition approval is seen as the biggest hurdle the companies face after 100% of shareholders earlier this month voted in favour of Telkom's R6.60 per share offer.

Olver says the commission has indicated the deal - as well as Vodacom's R7 billion bid for Neotel - is "massive" and she expects at least two extensions after the initial three-month period is over. This could take the process into January, she adds.

More confident

In parallel with the competition filing, papers have also been lodged with the Independent Communications Authority of SA, adds Olver. She notes the competition authority may provide an indication of its thinking by November, which will indicate how long the matter will take, as well as how likely the deal is to be passed.

This is Telkom's second bite at BCX after it initially approached the company eight years ago, putting a R2.4 billion offer on the table. That deal was spurned by the Competition Tribunal because of concerns over how it would affect downstream competition.

The second time around, both companies feel more confident because consolidation has been taking place globally - such as when NTT bought out Dimension Data in a R24.2 billion deal four years ago - and the landscape has changed.

Should the deal go through, BCX will remain as a standalone and separately branded entity within Telkom, although the telco's IT arm - Cybernest - will be reverse spun into it, adds Olver. She says the company will be ring-fenced for five years.

Adding BCX to Telkom will enable the telco to realise its vision of homes and offices, while BCX will benefit through the addition of connectivity to its portfolio, as well as access to more centres. Telkom will also bolster BCX's African ambitions.

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