The Econet Wireless Group`s $1.56 billion bid to increase its stake in V-Mobile, a Nigerian mobile company, has hit a snag, and the company is accusing V-Mobile shareholders and Celtel of colluding to prevent it from taking over the company.
Econet has also repudiated this week`s announcement by Celtel that it has acquired a 65% stake in V-Mobile.
Strive Masiyiwa, CEO of Econet, says the company has filed a court application against V-Mobile for breach of contract, and to restrain the sale of shares to Celtel until the matter has been resolved.
Last month, Econet, which has a 5% stake in V-Mobile, made an offer to increase its stake in V-Mobile by 65%. Econet was exercising its right to match the terms and conditions of the offer made by Celtel for 65% of V-Mobile at $1.05 billion.
Econet also had to put up an additional $461 million, to be made available should the shareholders decide to sell the rest of their shares within 90 days after the initial transaction was concluded, he says.
Econet raised $960 million in loans and $546 million from equity funds. However, V-Mobile failed to provide an escrow account where the funds would be placed until the transaction was concluded, he adds.
V-Mobile also failed to give Econet signed transaction documents which indicated the terms and conditions of the purchase, says Masiyiwa. As a result, Econet did not transfer payment for the shares to V-Mobile within the stipulated 30 days.
It will be up to the court to decide whether Econet was in breach of contract for failing to make the payment, or if V-Mobile was in breach because of its failure to provide the transaction documents and escrow account.
ITWeb is awaiting comment from V-Mobile.
Related stories:
Econet to increase V-Mobile stake
Econet to seek arbitration
Share