Shareholder nod to deal with Telkom

MAJORITY shareholders of Business Connexion have given the listed ICT company written support for the proposed takeover by Telkom.

The firm submitted merger notifications to the competition authorities yesterday‚ as the deal goes for a final vote of approval next week.

The deal will be put to a vote on Monday to get the official sign-off from Business Connexion shareholders.

“Key shareholders representing 80% of the ordinary scheme shares have given support for the proposed transaction‚” Business Connexion said.

Analysts have predicted the deal would win shareholder approval when they voted on it. Telkom pitched its offer for Business Connexion in May at a 20% premium to the firm’s share price. Payment would be in cash rather than Telkom shares‚ so shareholders would not be exposed to any future business risks‚ analysts said.

The analysts said the transaction looked fair to shareholders of both Business Connexion and Telkom.

Mergence Investment Managers equity analyst Peter Takaendesa said the transaction would be marginally dilutive to Telkom’s earnings per share in the short term. But there was potential for significant value to be unlocked in the longer term if management executed the buyout well.

Farai Mapfinya‚ head of equities and portfolio manager at J M Busha Asset Managers‚ said he did not think Telkom’s poor reputation would weigh on this deal.

“Most major missteps by Telkom in the past have been in geographies in which they had no experience.

“Business Connexion is a company that we think Telkom understands better than its previous forays outside South Africa.” – BDlive