Telkom’s share price soared close to 8% on Monday morning after the partly state-owned company’s confirmation that it is being courted for acquisition by a consortium led by former chief executive Sipho Maseko.
In a statement responding to media speculation surrounding the bid, Telkom said it had received an unsolicited non-binding indicative letter from the consortium and that the bid was being assessed by the company’s board.
The company’s share price rose from R31.08, just before Telkom’s confirmation, to R33.49 by 9.15am on Monday, before moderating to R31.23.
Maseko, through his investment vehicle Afrifund, has reportedly joined hands with Mauritius-based Axian Telecom and the Government Employees Pension Fund (managed by the Public Investment Corporation) to acquire a controlling stake in Telkom, where he was chief executive for eight years. Maseko has been credited with saving Telkom from inevitable doom by giving it a chance to move away from its stale fixed-line business and by making inroads into the mobile market.
News of the possible bid came after Telkom shares plummeted more than 30% in a single day last month after warning of a R13 billion writedown and a decline of as much as 105% in its annual earnings.
Its share price has since held at levels similar to its 2003 listing, leading market commentators to see the company as being in a vulnerable position.
Telkom has requested the consortium to provide further clarity on several matters,
including the proposed offer price and certainty of funding, the company said in its statement on Monday.
“As such, discussions remain of an exploratory and non-consensual nature, there being no certainty that the outcome of these discussions will result in a transaction,” it said.
“However, having regard to the continued detailed media speculation and Telkom awaiting further clarity, shareholders are advised to exercise caution when dealing in the company’s shares until such time as a further announcement is made.”
On Sunday, the Business Times reported that Maseko had presented Telkom with an offer of R46 a share. The offer, according to the report, was allegedly rejected for being too low and not in the best interests of Telkom shareholders.