Anil Ambani-controlled Reliance Communications (RCom) and South African telecom major MTN Group today ended negotiations for what could have created a $66 billion company with operations in over two dozen countries.
A day earlier, Reliance Industries, led by his elder brother Mukesh Ambani, had initiated arbitration proceedings against RCom over the first right of refusal for the shares of India's second largest mobile service provider.
In a late evening statement issued today, RCom and MTN said the two companies are unable to conclude a transaction due to certain legal and regulatory issues.
The talks collapsed as MTN wanted to avoid legal complications, a news agency said, quoting investment bankers.
The deadline for exclusive negotiations between RCom and MTN was due to end in three days.
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In a separate communication, MTN withdrew a cautionary statement on its shares. The South African company's market cap dropped nearly 16 per cent from $38 billion to $32 billion since the talks with RCom began on May 26.
RCom is the second Indian suitor to have called off talks with MTN. Bharti Airtel had earlier walked out of the negotiations with the South African giant after the latter proposed a holding structure that would have turned India's largest mobile phone company into an MTN subsidiary.
While there is fresh speculation that Bharti may resume a dialogue with MTN, sources close to the company said there was no such move at present.
Rcom was in exclusive talks with MTN for a proposed reverse merger, under which the Anil Ambani group was to acquire around 51 per cent stake in the combined entity.
The companies were earlier in exclusive talks for a 45-day period, which ended on July 8. The deadline was later extended to July 21.
The failed negotiations may widen the gulf between the feuding Ambani brothers who split in 2005. The infighting continued even after the separation of the businesses.
Reliance had earlier issued notices to MTN as well as RCom, stating it had the first right of refusal if RCom shares were to change hands. The company had also threatened legal action, a move that was initially rubbished by RCom.
The transaction would have been the largest overseas acquisition by an Indian company, surpassing the$12 billion Tata-Corus deal
Analysts said that MTN, which has around 68 million subscribers, may look to enter India, the fastest growing mobile market, through some other route.