Etisalat says still working to complete Zain deal
Zain hampered by 'unforeseen delays' - Etisalat
January 16, 2011 4:05 by Reuters
UAE telecoms firm Etisalat said on Sunday it was still working to complete a deal to buy a stake in Zain for $12 billion, despite missing a Jan. 15 due diligence deadline and the emergence of a potential rival bid.
Etisalat said it had not made sufficient progress toward finalising the deal by the deadline due to “unforeseen delays” in Zain providing access to relevant information.
“The parties do continue to work towards the announcement of a definitive transaction,” Etisalat said in a statement.
Shares in Etisalat fell 1.4 percent on the Abu Dhabi stock exchange
Etisalat offered to buy a 46-percent stake of Zain for 1.7 dinars a share last September. The offer was made to one of its major shareholders, Kuwaiti family conglomerate Kharafi Group.
The telecoms firm, 60 percent owned by the government, did not announce a new deadline for due diligence.
Etisalat, which lost its home monopoly in 2007 with the arrival of rival operator Du , launched its bid to expand into high-growth Middle East markets like Iraq.
In October, Kharafi Group said it had enough approvals from shareholders to tender to Etisalat’s bid, even though the deal is still dependent on the sale of Zain’s assets in Saudi Arabia, for anti-trust reasons.
Etisalat in November set a Jan. 15 deadline to sign definitive transaction documents and complete due diligence.
“The three months deadline to sign a definitive agreement was ambitious in the first place, given the size of Zain and that it operates in multiple jurisdictions,” said Irfan Ellam, telecoms analyst at Al Mal Capital. “The fact that due diligence has been extended is not too surprising.”
The deal has been dogged by other hurdles.
Al Fawares Holding, a Kuwait-based Zain shareholder unhappy with the deal process and a condition that Zain sell its stake in Saudi Zain , launched a court case to halt the due diligence. The case was dismissed by a Kuwait court last month.
Both Etisalat and Zain have operations in Saudi Arabia and regulatory requirements mean one group must quit its stake.
Last week, CNBC Arabiya reported that Turkey’s Cukurova Holding is in talks to buy 29.9 percent of Zain for $7.89 billion
That deal is being spurred by a Zain board member who is also a brother of Al Fawares’ head.
By Dinesh Nair
(Additional reporting by Praveen Menon, Matt Smith)
(Writing by Amran Abocar; Editing by Daniel Magnowski)