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There’s something about Zain

There’s something about Zain

Keep hearing about Zain but have no idea why? It’s because everyone wants a piece of it, seemingly. Let Kipp give you a quick rundown of who, what and why.

January 13, 2011 3:14 by

The complicated bit

The Etisalat bid is complicated by fierce resistance from Al Fawares Holding, an existing Zain investor. This is mainly because the deal would also be dependent on the sale of Zain’s Saudi assets for anti-trust reasons – Etisalat already operates in Saudi with Mobily, so it’s insisting that Saudi Zain is sold off as part of the deal. Al Fawares says that Etisalat should sell Mobily if it is serious about Zain, as selling Saudi Zain would be bad for Zain shareholders. Al Fawares is also angry that Al Khair National Co. for Stocks and Real Estate, which is owned by Kuwait’s Kharafi Group – a major shareholder in Zain. That’s because it agreed to the Etisalat offer without consulting Zain’s board.

Following so far? We hope so. As a result of all this Cukurova has been able to agree its bid with Sheikh Khalifa Ali al-Khalifa al-Sabah, a board member who is opposed to the Etisalat deal and linked with Al Fawares.

Now, the Etisalat bid is still up in the air, but we should know one way or the other soon enough: the company has said that its proposed deal could fail if definitive transaction documents were not signed by Jan. 15, when it completes its due diligence.

Who cares?

We all do. Given the recent lack of action in the markets, this could be the biggest deal for months. Life is getting interesting again.

So who will win out?

Or will both companies get their share? Well, that’s possible. What’s interesting is that Cukurova appears to be chasing a different set of shares to Etisalat. But the shares they’re after are treasury shares, which don’t have a vote. If the Etisalat Zain deal comes off Etisalat will have achieved greater control of the company for a smaller investment per share. But with the Etisalat deadline fast approaching and the aggressive moves from Al Fawares, it looks increasingly unlikely that the UAE telco’s deal will come off.

Whatever happens in the coming weeks, at least you have a vague clue what’s going on now. We hope.

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