Etisalat in preliminary approach to buy Zain stake; USD10.5 billion offer rumoured

30 Sep 2010

Dow Jones Newswires reports that United Arab Emirates-based telecoms group Etisalat confirmed yesterday that it has made a preliminary approach to buy a stake in its Kuwaiti counterpart Zain Group. Ahmed bin Ali, Etisalat Group senior vice president, said in an e-mailed statement: ‘Etisalat has submitted a preliminary conditional offer to buy a stake in Zain … Concluding this offer depends on the fulfilment of certain requirements and conditions necessary to finalise the deal.’ The statement did not disclose the size of the stake being sought, although it was preceded by a report from CNBC Arabia claiming that Etisalat had offered to buy a 46% stake in Zain at KWD1.7 (USD5.97) per share. Bloomberg added a report agreeing that Etisalat was looking to bid for a 46% stake in Zain Group, and quoted an anonymous source familiar with the private discussions saying that the UAE firm is offering around USD10.5 billion. Zain shareholders are meeting today to discuss the offer.

Zain’s largest single private shareholder, Mohamed Abdulmohsin Al Kharafi and Sons Co (Al Kharafi, or Kharafi Group), holder of a 12.4% stake according to Zawya.com, was amongst the parties to be sent the offer, with responses to the approach expected today. A banker told Dow Jones that National Bank of Kuwait is lead managing the potential deal, while BNP Paribas is advising the Kharafi Group on the sale of its shares. TeleGeography’s GlobalComms Database says that Kuwait Investment Authority (KIA), the country’s sovereign wealth fund, owns a 24.6% stake in Zain Group, which had 34.2 million active customers at end-June 2010 across Iraq, Bahrain, Jordan, Kuwait, Saudi Arabia, Sudan, Lebanon and Morocco. At the end of May 2010 Kuwaiti press reported that KIA had asked several investment firms to conduct studies to enable it to weigh up the possibility of selling its stake, valued at roughly USD4.4 billion. Zain Group (formerly Mobile Telecommunications Company, MTC) is listed on the Kuwait Stock Exchange (stock ticker: ZAIN) with a market capitalisation exceeding USD18 billion as at August 2010.

Kuwait, Emirates Telecommunications Corporation (Etisalat), Zain Group,

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