KUALA LUMPUR: The merger of Asian operations between Axiata Group Bhd and Norway's Telenor SA has been called off, confirming an earlier StarBiz report that the deal was hitting a brick wall.

Axiata and Telenor's Digi.com said in separate filings with the stock exchange that both parties have mutually agreed to end discussions over a non-cash combination of their telecom and infrastructure assets in Asia.

"Over the last four months, both Parties have been working on due diligence and finalising transaction agreements to be completed within the third quarter of 2019.

"Due to some complexities involved in the Proposed Transaction, the Parties have mutually agreed to end the discussions," said Axiata.

However, both parties acknowledged the "strong strategic rationale" of the proposed transaction and do not rule out a possible future transaction.

It also said the parties do not intend to provide further comments.

Trading in the shares of Axiata and Digi was suspended at midday.

StarBiz had earlier reported all indications point to the mega-merger being called off.

Apart from the sheer complexity of the deal, which involves 14 entities across nine countries, the stumbling blocks surround commercial issues, national and staff interests, and Indonesia’s reluctance to give its blessings, as it sees Norway as being part of the European Union’s (EU) pressure on palm oil imports.

Without Indonesia as part of the enlarged group, the odds of the deal materialising are basically zero.

“Both parties are trying their level best, as the merger would take them beyond their existing boundaries to create an Asian powerhouse. But the sheer complexity and the very long list of outstanding items surrounding commercial, national and staff interest make it terribly challenging.

“Some items on the list can be modified, some others are not agreeable to both parties, and the deal-breaker items are still hanging. So, with so many items still outstanding, they may just not want to drag on any longer and merger talks may have been halted. They may just call it off, ’’ said an industry executive with knowledge of the deal.

Read more at https://www.thestar.com.my/business/business-news/2019/09/06/axiata-digi-halt-trading-proposed-merger-deal-off