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JOHANNESBURG, May 22 (Reuters) - South Africa's Telkom SA

TKGJ.J has offered to buy Business Connexion BCXJ.J for 2.67 billion rand ($256 million) as it seeks to expand its information and communication technology services.

Under the transaction, ordinary shareholders will receive 6.60 rand per share, a 20 percent premium over the 5.50 rand the stock was at before Business Connexion first alerted the market about a possible deal on April 15.

"A key consideration of our strategy is to grow beyond our core business of connectivity and expand into end-to-end ICT services," Telkom Chief Executive Sipho Maseko said in a statement. "This will form part of the strategy to improve performance and restore profitability."

Business Connexion, which runs information technology infrastructure such as data centres, will become a Telkom subsidiary and delist from Johannesburg's stock exchange if the deal goes through.

Its shares initially jumped as much as 9 percent on the news on Thursday, before retracing to 6.9 percent at 6.37 rand by 0757 GMT.

Those of Telkom dropped 1.3 percent to 37.66 rand, compared with a 0.6 percent rise by Johannesburg's All-share index

.JALSH . ($1 = 10.4174 South African Rand)

(Reporting by Helen Nyambura-Mwaura; Editing by Stella Mapenzauswa)

((helen.nyambura@thomsonreuters.com)(+27 11 775 3034)(Reuters Messaging: helen.nyambura.thomsonreuters.com@reuters.net))

Keywords: SAFRICA TELKOM SA/BUSINESSCONNEXION