CELTEL ANNOUNCES INTENTION TO BUY VMOBILE BUT ECONET CONTESTS THE PURCHASE

Mergers, Acquisitions and Financial Results

Africa's third largest mobile services provider has bought a majority share in Nigeria's Vmobile for $1bn, the company said last Tuesday.

"MTC Group has acquired Vmobile in Nigeria through its subsidiary Celtel International in a big transaction," MTC said.

Celtel said last month that it had agreed to purchase 65 percent of Vmobile for just over $1bn, with the option to purchase the remaining 35 percent. The deal was put on hold though as Econet, the continent's forth-largest operator, was also bidding for a majority stake through its 5 percent holding.

Econet Wireless on Wednesday said it defied its detractors and successfully raised $1.5bn in less than 30 days to buy all the shares of VMobile, but has accused its Nigerian partners and Celtel of colluding to stop it from taking over the company.

Econet Group CEO Strive Masiyiwa said the company had raised $960mn in loans from syndicated banks and $546mn in equity from equity funds, but the selling shareholders in VMobile had refused to provide transaction documents required for successful completion, including details of the escrow accounts for payment of the money.

He said Econet was forced to seek legal redress in UK courts to have the documents released. However, the UK court which initially issued an injunction to stop the transaction later discharged the injunction and referred the matter to a Nigerian court because of a technicality over jurisdiction. Econet has now made an urgent application to the Nigerian courts for an order to force the Nigerian shareholders to release the documents required to complete the purchase.

The refusal to release the transaction documents which were promised in an offer letter sent to Masiyiwa by the selling shareholders has triggered a new legal dispute between the shareholders who have been fighting for more than 3 years.

Masiyiwa said that although he was disappointed that his Nigerian partners were trying everything to stop his company from taking over Vmobile, he was confident that when the matter comes to the courts they will win on merits, and reverse any attempt to sell to Celtel.

Responding to the announcement by Celtel that it was proceeding to purchase 65 percent of VMobile claiming Econet did not exercise its right of pre-emption by coming up with the money on time, Masiyiwa said Econet would fight to block the transaction. "If they buy disputed shares, they must know that they are holding them in trust, as those are our shares," said Masiyiwa.

Business in Africa