A family row has been blamed for the breakdown of M&A talks between one of India’s largest companies, Reliance Communications, and South Africa’s telecommunications giant MTN.
Talks of a tie-up were called off on 18 July because of what the companies described as “legal and regulatory issues”.
The failure of the deal may be related to a family row that caused the Reliance Group to be split in two in 2005 when brothers Mukesh Ambani and Anil Ambani decided they were unable to work together.
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Under the split, Mukesh kept control of the oil, gas and petrochemicals businesses of the group under the name Reliance Industries. Anil in turn received Reliance Energy, one of India’s biggest power utility firms, Reliance Communications and Reliance Capital, the group’s finance arm.
In May, Reliance Communications announced that it had entered into talks with the MTN Group for a tie-up. Reports speculated that Reliance Communications would become a subsidiary of MTN, but with Anil as the largest single shareholder and likely chairman of the merged entity.
However, the deal took a hit in June when Mukesh, India’s wealthiest man, said he had first right of refusal to purchase his estranged younger sibling’s controlling stake in Reliance Communications.
Reliance Industries said it had “in good faith” notified both the Anil Ambani group and MTN of the stipulation. But at the time, MTN responded by telling the media that “nothing has changed. We are still having talks with Reliance Communications.”
Reliance Communications, India’s second-largest mobile phone company, called Reliance Industries’ assertion “legally and factually untenable … borne out of mounting despair and frustration” over the “continuing success” of Anil’s group.
If the merger had gone ahead, it would have created an international telecoms company with over 115 million customers.
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