Telkom SA Ltd. ADRs rose in afternoon trading Monday after the telecommunications company said it was contacted about a possible takeover and has received a nonbinding proposal for some of its stake in Vodacom Group Ltd.
The South African company said a consortium comprised of Mosima "Tokyo" Sexwale's Mvelaphanda Holdings, Och-Ziff Capital Management Group and other strategic funders are interested in buying the entire company. The consortium has set several preconditions, the company said, including Telkom's sale of its 50 percent stake in Vodacom, which is also based in South Africa.
In a separate offer, Telkom received a nonbinding proposal from a subsidiary of the U.K.'s Vodafone Group PLC to buy part of Telkom's stake in Vodacom Group as long as Telkom sells the remaining stake to shareholders.
"The board of Telkom, in accordance with its fiduciary duties, will evaluate all bona fide offers with a view to maximizing shareholder value," the company said of both items in a release. "No transaction will be entered into without requisite shareholder approvals."
The sale of the Vodacom stake would help Telkom's shares, as it would likely unlock the value of the rest of the business, Goldman Sachs analyst Sergei Arsenyev said in a note to clients. He rates Telkom as "Hold."
Telkom is based in Pretoria, one of three South African capital cities. Its ADRs rose $4.79, or 6.7 percent, to $76.80 in the afternoon. ADR stands for American Depositary Receipt, which is a security designed to allow U.S. investors to trade shares of companies based overseas.
The Bank of New York Emerging Markets ADR Index _ which includes shares of companies based in South Africa, Mexico, Brazil and more _ lost 4.42 points to 379.42.
The Bank of New York Composite ADR Index declined 2.29 points to 180.55 as the U.S. markets declined in afternoon trading.
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