Millicom has terminated its share purchase agreement to acquire Telefonica’s Costa Rican unit, in accordance with the terms of the original deal.
The companies agreed to a US$1.65 billion deal in February 2019 that would see Millicom take over several of Telefonica’s Latin American operations, including units in Nicaragua and Panama. Costa Rican regulator Sutel cleared Millicom’s US$570 million acquisition of Telefonica’s local unit in September 2019.
However, under the terms of the SPA, Millicom’s takeover of Telefonica Costa Rica required additional regulatory approvals to be issued by 1st May 2020 – a fact that Millicom has now used to its advantage.
Last week, Telefonica informed Millicom of its frustration over the latter’s apparent inactivity in closing the deal, warning that it would take the necessary legal action to ensure the acquisition went ahead as planned.
However, Millicom countered that the deadline for the necessary regulatory approvals was looming, and that it intended to terminate the SPA in accordance with the terms if the approvals were not received – a threat on which it has now followed through.