It looks like the merge between Rain and Telkom has hit a major bump in the road.
Rain, the data-only network provider, said on Tuesday that it was forced to rescind its announcement to merge with Telkom.
The merger was taken to task by the Takeover Regulation Panel (TRP) and was termed as unlawful.
Rain released a statement last Thursday, informing the public about the proposed merger.
The TRP then said that the merger announcement was sent without its approval.
It should be noted that the TRP’s approval is required by law, and as such, the organisation demanded that Rain resend or withdraw the media announcement.
In response, Rain said they would seek legal advice.
A FEEDING FRENZY
Telkom is a hot commodity. The telecommunications company is being pursued by not only Rain, but by MTN.
In July, MTN and Telkom told their shareholders that they had entered into a formal discussion about MTN buying Telkom.
Within weeks, Rain said not so fast and made a formal request to present the Telkom Board with a proposal which would ultimately result in the merger of the two companies.
The 40.5 percent up for grabs from Telkom is estimated to be worth R7 billion.
Rain hoped that the merger would create a “5G powerhouse" in South Africa. The company is advocating for a third player to compete against a "telecommunication duopoly" in South Africa.
THE WITHDRAWAL
On Tuesday, Rain was forced to withdraw its media release and said it would submit a formal proposal to Telkom in the coming weeks.
"As Rain, we are pleased with Telkom’s SENS (Stock Exchange News Service) announcement stating that if an offer or formal proposal is received from Rain, the board of Telkom will consider it," the company said in a statement.
BUSINESS REPORT