Telkom SA SOC Ltd. (TKG) agreed to acquire Business Connexion Group Ltd. (BCX) as South Africa’s largest fixed-line phone company plans to boost its cloud-based offerings of information and communication technology services.
Telkom, based in Pretoria, is offering 6.6 rand a share for Business Connexion, an 18 percent premium over the 30-day volume-weighted average price, the companies said in a joint statement today. The offer values Johannesburg-based Business Connexion at about 2.7 billion rand ($257 million), based on 405 million shares outstanding, according to data compiled by Bloomberg.
Telkom, 40 percent owned by the South African government, is struggling to revive revenue growth as consumers migrate from fixed-line technology to data-enabled smartphones and tablets. The company needs to cut its workforce of about 19,200 employees by almost a third over five years to remain financially viable, Chief Executive Officer Sipho Maseko said in December. Telkom said May 13 it intends to reduce its “management layer” by about 25 percent.“The proposed transaction will address the technology and telecommunications needs of South African companies, both within their domestic markets and as they expand into other African countries and beyond the continent,” the companies said in the statement.
Business Connexion shares jumped 9.1 percent to 6.50 rand at 11:24 a.m. in Johannesburg, the steepest intraday gain since November 2011. Telkom fell 0.7 percent to 37.91 rand.
Telkom is the fifth-best performing stock of the 166-member FTSE/JSE Africa All-Shares Index (JALSH) this year with a gain of 35 percent, valuing the company at 19.7 billion rand.
