Business Connexion CEO Benjamin Mophatlane

Seven years after it was forced by the competition authorities to abandon a deal to acquire listed IT services group Business Connexion (BCX), Telkom is back for another go.

The telecommunications operator has offered BCX shareholders R6,60/share, a 20% premium over the share price at close of trade on 14 April when the company issued a cautionary notice.

The all-cash offer values BCX at R2,7bn.

An independent board of BCX directors reviewed the terms of the proposed transaction and recommended that the offer be presented to shareholders. This recommendation and the notice of the scheme meeting will be detailed in a circular to be posted to BCX shareholders in June.

The proposed transaction is subject to a number of material conditions, including the approval by the competition authorities and other regulatory approvals. It’s not immediately clear why Telkom believes it will be successful this time around in having the deal cleared by the Competition Commission.

“BCX has an existing convergence strategy, and therefore believes there is sound rationale for the offer to be considered, as major global technological changes are driving the convergence of the IT and telecoms industries,” the IT group said in a note to shareholders on Thursday.

“This merger would therefore advance BCX’s convergence strategy and present new and exciting opportunities for staff in the greater combined entity.”

BCX said that it understands that BCX brand and management team will remain in place in the event of a successful transaction.

“There are clear opportunities that exist between our respective companies,” said BCX CEO Benjamin Mophatlane. “The dynamics of the global ICT industry are changing, particularly with the evolution and convergence of technologies that have blurred the lines that once separated telecoms players from the world of IT.”

BCX said the two companies have “complementary capabilities”.

“BCX also believes that a merger with Telkom would enhance the company’s global attractiveness, particularly on the African continent, by leveraging Telkom’s extended communications network and strategic international relationships to enable additional capabilities with which to service BCX’s multinational client base,” it said.

“It is business as usual for us until all the conditions of the proposed transaction have been fulfilled. Unrelated to the offer, we are currently busy with a reorganisation process which supports the delivery of sustainable growth in the business and enhanced quality of service offerings to our customers. This important process is expected to be completed by the end of our financial year.”