Telecommunications provider Huge Group has called off a plan to acquire ICT specialist Centracom for R81,6m, saying it was unable to reach agreement with “relevant shareholders” about a funding arrangement to make the deal happen.
A memorandum of agreement between the parties has lapsed. The agreement is “not of further force or effect, save for any confidentiality undertakings owed by each of the parties to the other”, Huge Group said in a statement on the JSE’s stock exchange news service.
Huge Group had initially proposed that 90% of the proposed acquisition be settled through the issuing of new shares, but said on Tuesday that it had been looking for an alternative funding arrangement.
The acquisition, if it had gone ahead, would have increased Huge Group’s customer base by 20% to 13 000 and grown its number of billed minutes by 50%.
Huge Group CEO James Herbst said in October that the acquisition would have provided his company with “alternative technology choice in the provision of voice services” and it would have diversified its risk.
He told TechCentral on Tuesday that Centracom is a “great business and the fit was an extremely good one for Huge Group”.
“We were also happy with the price we were paying for Centracom,” he said. “However, the creation of shareholder value for Huge Group through acquisition requires the mix, terms and pricing of its own equity and debt capital to be such that they do not detract from what it is trying to achieve.
“We put alternatives to the shareholders of Centracom but these were not acceptable to them. This is the reason why Huge Group is not pursuing the acquisition of Centracom. If circumstances change, we would be prepared to engage again.” — © 2015 NewsCentral Media
- See also: Huge Group in talks to buy Centracom