Quote:
Originally Posted by shrey420  tnx for this discussion........................................ ......i"""' |
Analyst had predicted Bharti-MTN deal wont work..Few Reasons:
- According to the proposed deal, Bharti decided to buy 49 per cent of MTN through a cash-cum-shares offer totalling about $13.1 billion; MTN would buy 36 per cent of Bharti, with a similar cash-cum-shares offer of around $10.5 billion. At current share and exchange rates, this means Bharti would pay around $7.4 billion in cash, and MTN around $2.9 billion -- leaving around $4.5 billion to be financed through loans.
- With 49 per cent, and with a South African government fretting about retaining MTN's local character, one can be sure Bharti would not have a completely free hand to run MTN as it sees fit. That, however, was the lesser problem. The bigger one was people. No merger anywhere can succeed if the employees of two merging entities do not see themselves as one as The cultures of Bharti and MTN are considerably different, and it is a fair bet that the two companies would have spend at least a couple of years trying to find an alignment of values, either though combo branding (Airtel-MTN) or a completely new one.
- Mergers fail largely because expected synergies take a longer time to deliver, or the price is too high, or there is no one completely in charge. In the Bharti-MTN case, all three applied. First, 49 per cent would not give Bharti unhindered control. Second, paying $4-5 billion in cash means it will take several years to amortise the cost. Third, synergies would not come till the people, culture and branding issues are addressed, and that will take some doing.
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