MTN Agrees to Buy Investcom for $5.5 Billion in Cash
By: Administrative Account | Source: Bloomberg
May 2, 2006 6:09AM EST

May 2 (Bloomberg) -- MTN Group Ltd., Africa's largest mobile- phone company, agreed to buy Investcom LLC for $5.5 billion in cash to add subscribers on the continent. MTN offered to pay $3.83 for each share of Dubai, United Arab Emirates-based Investcom, which has 4.9 million customers, the company said today in a release to Johannesburg's stock exchange. Johannesburg-based MTN has a market value of 100 billion rand ($16.6 billion) and about 23.2 million customers. MTN, is expanding in Iran, Nigeria and eight other African countries as competition at home intensifies. Investcom has operations in Benin, Cyprus, Ghana, Guinea Bissau, Liberia, Sudan, Syria and Yemen and has licenses to build and run networks in Afghanistan and Guinea. MTN has no networks in those countries. ``Investcom has a good portfolio of assets, including markets that are difficult for competitors to get a foothold in,'' said Christopher Palmer, who manages more than $2 billion in emerging market assets at Gartmore Investment Managers in London, including shares in both companies. ``Strategically, it's a good fit as they have no overlapping service areas.'' Last year, MTN made an unsuccessful bid for Celtel International BV. It forecast on March 23 that its subscribers will grow by 30 percent in 2006. Shares of MTN fell as much as 0.9 percent to 59.45 rand and traded at 59.50 rand at 10:03 a.m. in Johannesburg. The stock has gained 41 percent over the past year. Alternative Offer The company has also offered a cash and stock alternative of $2.08 in cash and 0.18 MTN share for each Investcom share. Investcom trades on the Dubai and London exchanges and has a market value of $4.35 billion. The acquisition ``delivers the next stage in MTN Group's emerging markets growth strategy,'' Chief Executive Officer Phuthuma Nhleko said in the statement. The companies ``have a shared vision to be the leader in developing markets and both have already shown progress individually in this regard.'' M1 Ltd., a closely-held company which owns 71 percent of Investcom, has agreed to the cash and stock alternative, MTN said. It will not sell its MTN shares for 14 months, it added.

To contact the reporter on this story: Stewart Bailey in Johannesburg Sbailey7@bloomberg.net Last Updated: May 2, 2006 04:10 EDT