KUWAIT, (Reuters) – A dispute over UAE telco Etisalat’s $12 billion bid to buy 46 percent of Kuwait’s Zain escalated on Wednesday after a Zain board member threatened legal action to block the deal.
Selling Zain’s Saudi assets is a condition for closing the deal with Etisalat, and Kuwaiti ruling family member Sheikh Khalifa Ali al-Khalifa al-Sabah told CNBC Arabiya he aimed to block that sale in the courts.
“Zain Saudi will not be sold … If the majority of the board approves it, we will take legal action to stop selling Zain Saudi,” he told the TV channel.
Sheikh Khalifa said Zain would not get a fair price for its Saudi assets as long as it was a condition for the deal, and keeping it was crucial for Zain’s five-year plan.
He also said Zain’s board should not have approved opening the books to Etisalat for due diligence before reviewing the initial agreement between Etisalat and major Zain shareholder Kharafi Group.
Earlier on Wednesday, in a dispute being played out in competing Kuwaiti newspaper advertisements, the Kharafi Group’s Al Khair National for Stocks and Real Estate posted an ad saying Etisalat’s offer was beyond doubt.
It also questioned why another big Zain stakeholder, Al Fawares Holding, which is estimated to own a little under 5 percent of Zain, had pulled out of the deal and criticised it, since the deal “would give generous returns to every shareholder”.
“(Al Fawares) is one of those who approved entering the deal, and the National Investments Co (NIC) has a letter from them to prove they wanted to enter the deal with up to 100 million shares,” Al Khair said.
Etisalat declined to comment on the issue.
Al Fawares, the opposing shareholder, said a 2009 offer from an Indian-led consortium to buy a stake in Zain turned out to be “not serious” and had caused losses to shareholders.
Last month, Kuwait’s bourse vetoed a bid by Securities Group Co for about 5 percent in Zain, which was a move designed by Securities Group to protest against the bid.