Teleglobe International Holdings, a leading provider of international telecommunications services to Internet service providers, fixed and mobile network operators, announced it has entered into a definitive agreement to be acquired by Videsh Sanchar Nigam Limited, VSNL, India's leading provider of international communications and Internet services. The transaction is structured as an amalgamation of Teleglobe with a newly formed subsidiary of VSNL. Pursuant to the amalgamation, Teleglobe shareholders will receive consideration of $4.50 per common share in cash. This price represents a 22% premium over Teleglobe's closing market price on July 22, 2005 and a 59% premium over Teleglobe's average closing market price for the 3 months ended July 22, 2005.
Teleglobe's Board of Directors has approved this transaction, which is expected to close within the next 6 to 8 months. The transaction is subject to regulatory approvals and notices, the approval of Teleglobe's shareholders and other customary closing conditions. Approval of the transaction requires the approval of 50.1% of the outstanding Teleglobe common shares. Teleglobe Bermuda Holdings Ltd, an affiliate of Cerberus Capital Management, L.P. that owns 66.2% of Teleglobe's outstanding common shares, has agreed to vote its shares in favor of the amalgamation. Liam Strong, president and chief executive officer of Teleglobe, and Rick Willett, chief operating officer of Teleglobe, have also agreed to vote their common shares in favor of the amalgamation.
Liam Strong, president and CEO of Teleglobe, stated, "After evaluating this and other expressions of interest received over the past several months, our board of directors accepted VSNL's bid as a means of delivering immediate value to shareholders at a significant premium to recent public trading prices. Teleglobe will become the leading international division for the large, fast-growth Indian telecommunications market and will be able to leverage VSNL's leading position in the Indian market, its development capabilities, and the additional financial strength, scale, and vision to more rapidly grow Teleglobe's service offerings for its customers. During the interim approval period, we will remain focused on strong execution of our volume growth road map and continued new product introductions."
N Srinath, Director on the Board of VSNL, stated, "Teleglobe's high quality assets and established international expertise offered an ideal opportunity to enhance our telecommunications customer solutions over the long term. This strategic transaction creates a highly complementary combination of Teleglobe's extensive wholesale Voice VoIP/TDM network, Global Tier 1 IP Network, and deep customer base with VSNL's integrated telecom services to strengthen our position as a leading global telecoms provider."
Morgan Stanley acted as exclusive financial advisor to Teleglobe, and rendered a fairness opinion to Teleglobe's Board of Directors in connection with the transaction. Standard Chartered served as financial advisor to VSNL. Schulte Roth & Zabel, LLP acted as Teleglobe's legal counsel, and Kelley Drye and Warren served as counsel to VSNL.
