Mergers, Acquisitions and Financial Results

Vodacom’s bid to enter the Nigerian cellular market, by buying 51% of Econet Nigeria for 230m, is starting to look shaky, after the signing of the deal was postponed without explanation at the last minute. Vodacom wants to grab a piece of the lucrative Nigerian market through Econet Nigeria, pitting it against its South African rival, MTN, which already has a thriving Nigerian business.

Although Econet Nigeria has agreed to the deal, it requires unanimous approval from all the company’s 22 shareholders and 5% shareholder Econet Wireless is blocking this as it wants to increase its stake to 33%, claiming it has the right of first refusal.

Econet Wireless CEO Strive Masiyiwa said before Christmas that six envoys came to his Johannesburg offices last week claiming to represent Vodacom including senior figures from government and the African National Congress.

"This group offered us ridiculous amounts of money to buy our 5% shareholding, but we rejected these lobbying efforts. We do not want to sell, and we are not going to approve the Vodacom deal in a month of Sundays." Econet Wireless will come before the International Arbitration Court in Paris in January to argue for its right of first refusal.

Despite the opposition, an 81page share purchase agreement between Vodacom and Econet Nigeria had been drawn up, and was set to be signed last Friday. An unexplained change in plans meant this did not happen.

On November 27, Econet Nigeria sent out an agenda telling shareholders they would be asked at the December 19 annual general meeting to pass any "resolutions necessary for the acquisition of a controlling shareholder interest in (Econet Nigeria) by Vodacom".

But these resolutions were surprisingly not put to shareholders at the annual general meeting raising the question of what went wrong. Asked yesterday when it would sign the deal, Vodacom’s response was "we will disclose when we are ready".Asked about the delay, which it confirmed, Vodacom said: "We do not wish to disclose any further details".

The shareholders’ agreement has a space for each shareholder to sign, including Econet Wireless, but Masiyiwa is adamant this will not happen and that "without our approval, they cannot go ahead".

Despite Vodacom’s initial confidence that the deal would go through, it is reluctant to give any time frame, saying "it is difficult to negotiate with time lines. Each stage dictates the next stage, and therefore it is not possible to predetermine."

Business Day