The £2.1 billion acquisition of Dimension Data, by Japan-based Nippon Telegraph and Telephone Corporation, has been approved by South African finance minister Pravin Gordhan and the Exchange Control Department of the South African Reserve Bank.
This is another step in the deal, which is expected to be wrapped up by October. The deal will result in Dimension Data being de-listed from both the Johannesburg and London stock exchanges.
Last week, DiData and NTT said they had received the necessary antitrust clearance from the European Commission to go ahead with the offer.
The companies said, at the time, that they had received notification from the Foreign Investment Review Board that there were no objections to the offer under Australia's foreign investment policy. It is not known what steps still need to be taken before the deal can be finalised.
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 Dimension Data shares just before the company announced the acquisition.
Pending investigation
In the days just before the announcement, shares in Dimension Data 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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DiData buyout a step closer
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