‘Dual listing’ and how to make it happen

It seems inappropriate to describe the failed deal between Bharti Airtel and MTN Group as either a merger or an acquisition (especially given the pains taken by both parties to avoid any suggestion of the latter). As the deal structure evolved during negotiations, it was increasingly clear that some key MTN stakeholders would insist on Bharti shares being listed outside India – probably on a South African stock exchange. Such listing is popularly but misleadingly referred to as “dual listing”.

Identifying the real objectives underlying the request for Bharti to be listed overseas – and understanding why these objectives could not be achieved – is necessary to explain why the deal fell apart.

Dual listing – in one sense of the term – refers to a cross-border merger in which shares of the merged entity remain listed on the respective original stock exchanges (SEs) and in the original local currencies. A variant of this model occurs when two or more companies create a holding company instead of merging, with shareholders of the respective companies swapping their shares for those of the holding company. The “targets” become subsidiaries (in part or whole) of the holding company.

H Jayesh is the founder partner and Prachi Loona is an associate at Juris Corp. Juris Corp is a full-service law firm based in Mumbai. The firm specializes in banking and finance, joint ventures, foreign investments into India, private equity, direct tax, bankruptcy and restructuring, cross-border M&A, insurance, energy and infrastructure, dispute resolution and international arbitration.