KUWAIT CITY (AFP) – UAE telecoms giant Etisalat said on Wednesday it is set to buy a controlling stake in Kuwaiti telecoms firm Zain in a deal worth up to 12 billion dollars.
Etisalat, the biggest telecoms provider in the region by market value, said it offered 1.7 dinars (6.1 dollars) per share for the 51-percent stake, putting the estimated cost of the deal as high as 12 billion dollars.
“The offer is binding subject to a number of conditions, which include the successful disposal by Zain of its entire interest in Saudi Zain in a timely fashion,” it said in a statement issued in Abu Dhabi.
Etisalat operates Mobily, one of three Saudi mobile telephone service providers and a competitor of Saudi Zain.
The terms also include the completion of satisfactory due diligence, obtaining all applicable regulatory approvals and that there should be no material adverse change in Zain’s business, financial or regulatory affairs.
Due diligence and the other work required to reach definitive agreements would take a number of weeks, while the transaction is unlikely to close before the end of the first quarter of 2011.
“Our proposal will terminate unless the parties have entered into definitive transaction documents by 15 January, 2011,” said the Etisalat statement.
The Khorafi Group, the leading private shareholder in Kuwait’s Zain, had announced through an intermediary that it signed a preliminary agreement with Etisalat to sell a majority stake in the company.
“Our client has informed us that an agreement has been signed… with UAE Etisalat,” the National Investment Co., which represents the Khorafi Group, said in a statement posted on the Kuwait Stock Exchange website.
“Due diligence will start in accordance with the rules and regulations of the company (Zain).
“Sale procedures will be executed in accordance with the rules and regulations of the Kuwait Stock Exchange,” the statement added.
Etisalat chairman Mohammed Omran hailed the deal as strategic for his company’s expansion plans.
“Matters are still at an early stage, and the information and data currently available to us are partial,” he said in the statement.
“Once the rigorous process of due diligence is completed, the picture will become clear and we will then be in full possession of the necessary details,” he said.
Omran said the acquisition offered Etisalat broad synergies.
“The Etisalat-Zain deal provides excellent integration into Etisalat’s operations, taking into consideration that Zain’s geographic footprint complements that of Etisalat to a large extent. These are the markets of Sudan, Iraq, Kuwait, Jordan, Bahrain, Lebanon and Morocco,” he said.
“Our regional presence consolidates our position among the biggest international telecommunications companies and we believe that this deal will provide positive returns to Etisalat and added value to its shareholders.”
The Khorafi Group directly owns 12.7 percent of Zain, but its share is believed to amount to more than 20 percent if indirect stakes are taken into account.
The Kuwaiti group had earlier said it started collecting the needed shares from other holders to make up the deal.
The signing on Wednesday apparently comes after snags were overcome between leading Kuwaiti investors in Zain over the deal.
Earlier this year, Zain sold its operations in 15 African countries to Indian telecoms giant Bharti Airtel for 10.7 billion dollars at a profit of more than three billion dollars.
Kuwait’s government holds a 24.6-percent stake in Zain. The other two Kuwaiti mobile companies, Wataniya and Viva, are run by Qatar’s Qtel and Saudi STC.