Cellular network Cell C has rejected a takeover offer placed on the table by state-owned telecommunications company Telkom on Friday.
Telkom confirmed that the Cell C board had sent it written notice that the non-binding proposal was rejected.
“The Telkom board continues to believe the offer is a compelling proposition that would have created significant value for all stakeholders including Telkom’s shareholders,” said a statement from the company.
The rejection of the deal means it’s likely Cell C will instead go for a cooperation pact with cellular company and rival MTN, as well as a recapitalisation plan with the Buffet Group, which was also under negotiation during the same period as the Telkom deal.
The recapitalisation plan is expected to see Cell C sell some of its assets.
Telkom had wanted to combine its cellular offering Telkom Mobile and Cell C – the country’s two smallest mobile networks, into a large network which could compete with the pair’s biggest rivals – Vodacom and MTN.
Telkom attempted to purchase Cell C before, in 2017.
Cell C is in significant debt.
“Any deal for Cell C has to resolve its ±R9 billion debt problem, which is ±R1.5 billion larger than it was last May,” Moneyweb’s Hilton Tarrant wrote in an article about the talks between Telkom and Cell C.
“Cell C is arguably in worse shape today than it was two years ago when Telkom tried and failed,” he added.