July 25, 2005 Hamilton, Bermuda -- Teleglobe, a provider of international telecommunications services to Internet service providers, as well as fixed and mobile network operators, today announced its entry 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.
According to a press release, pursuant to the amalgamation, Teleglobe's shareholders will receive consideration of $4.50 per common share in cash. This price represents a 22% premium over the company's closing market price on July 22, 2005, and a 59% premium over the company's average closing market price for the 3 months ended July 22, 2005.
Teleglobe's Board of Directors has approved the 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., which 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.
"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," remarks Strong. "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."
"Teleglobe's high quality assets and established international expertise offered an ideal opportunity to enhance our telecommunications customer solutions over the long term," adds N. Srinath, VSNL's board director. "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 telecom provider."
In connection with the transaction, Morgan Stanley acted as exclusive financial advisor to Teleglobe, and rendered a fairness opinion to Teleglobe's board of directors. 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.