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Etisalat scraps plans for $12bn Zain stake buy

22 марта 2011

U.A.E.-based Emirates Telecommunications Corp., or Etisalat, the region's biggest telecom provider by market value, said Saturday it has scrapped a near $12 billion plan to buy 46% of Kuwait's Mobile Telecommunications Co., or Zain, a deal that would have given it access to new markets in the region such as Iraq, Kuwait and Morocco.

"Due to the results of due diligence done by Etisalat's financial advisers and legal experts, the political turmoil in the region, the absence of a consensus between Zain's shareholders, and the effect of the law binding offers that is due to be issued in Kuwait ... Etisalat conditions that were announced on Nov. 3 are no longer applicable," Etisalat said in an emailed statement.

Key Zain shareholder, Al Khair National Co. for Stocks and Real Estate, which is controlled by Kuwait's Kharafi Group, was leading discussions with Etisalat on its bid for Zain.

Etisalat launched its original Zain offer, worth about $11.7 billion, in September last year. It missed its first self-imposed Jan. 15 due diligence deadline due to what it said at the time was a "lack of information." Its second due diligence deadline expired at the end of February.

The U.A.E. telco's pursuit of Zain was plagued by setbacks and problems ever since it launched its original offer. One major stumbling block was Zain's 25% share in its Saudi operations. As it stands, both Zain and Etisalat operate in the Saudi market, an issue that analysts said might have concerned the local regulator there and blocked a possible deal.

The Zain Saudi issue then appeared to have been sorted last week after Zain said Saudi's Kingdom Holding Co. and Bahrain's Batelco Group had agreed on the terms to buy its 25% stake.

Batelco's Chief Executive Officer, Peter Kaliaropoulos, said that their position to acquire Zain Saudi has not changed.

"Our intention to invest in Zain KSA has not changed. Subject to the Terms and Conditions of our Consortium's offer remaining acceptable to Zain Group and Zain KSA, we will proceed with the due diligence exercise," Kaliaropoulos told Zawya Dow Jones.

"Should Zain Group propose changes to the agreement reached [due to the Etisalat deal not proceeding], we of course will review our position," he added.

Zain's spokesman said the situation of the Zain Saudi sale will be clear this week.

"The collapse of Etisalat's acquisition talks with Zain represents a reversal for the UAE group, which is keen to increase its international revenues because its revenues in its home market are flat or declining," said Matthew Reed, a senior analyst at Informa Telecoms and Media in Dubai.

Etisalat is now left with few regional opportunities after falling to secure the Zain stake, Reed said.

"The successful completion of the Zain deal would have given Etisalat control of a number of market-leading mobile operations in the Middle East, and positioned them as the leading pan-regional mobile operator in the region. Now, Etisalat's international investments team will most likely focus its efforts on the remaining, smaller, opportunities in the region, such as Syria's third mobile license and Iraq's fourth mobile license," he added.

Источник: Total Telecom

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