Millicom Cellular Acquisition Collapses, Stock Down 26%

Excerpt from our One Page Annotated Wall Street Journal Summary (which you can get emailed to you every morning by signing up here):

Millicom Ends Talks With China Mobile

• Summary: Emerging markets wireless operator Millicom International Cellular SA ended talks to be acquired by China Mobile Communications Corp. The $5.3 billion acquisition had been widely publicised, but broke down over price. China Mobile liked Millicom's business, its due diligence turned up no unpleasant surprises, but there was some concern the geographical dispersion of Millicom's networks (Millicom operates wireless networks in numerous emerging market countries) would make management a challenge. People close the negotiations said that China Mobile's board believed that the sell-off in emerging market assets since the initial deal price was set left the deal looking too expensive. In its press release, Millicom said that China Mobile "won't be in a position within an acceptable timeframe to make a binding offer that is suitably attractive, given the current strong performance of the business, or sufficiently certain of closing".
• Comment on related stocks/ETFs: Millicom's stock (MICC) immediately fell 26% on publication of the press release. China Mobile's stock (CHL) ended the day up 2.2%. A China Mobile acquisition of Millicom would have intensified competitive pressure on Ericsson (ERICY), Alcatel (ALA), Motorola (MOT) and Nokia (NOK), so cancellation of the deal is a long run positive for those stocks.