France Telecom tender offer for ECMS rejected

Egypt’s regulator gives thumbs down, claiming offer unfair to minority shareholders.

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By  Martin Morris Published  April 7, 2009

Egypt's Capital Market Authority confirmed on Tuesday it had rejected a tender offer by France Telecom to buy a further stake in Egyptian Company for Mobile Services (ECMS), describing the offer, which was below a court-ordered price, as unfair to minority shareholders.

France Telecom said in a statement it had offered to buy 49 percent in ECMS, which is known by its brand name Mobinil, at a premium of 33.1 percent to the closing price on April 5, and 54.2 percent to the average of the last six months, giving an implied offer of 199.69 pounds.

France Telecom added that it regretted the CMA’s decision but given the current circumstances it considered it was not obliged by law or by market practice to launch a mandatory buyout offer.

ECMS is 51 percent owned through a holding company, which in turn is 71.25 percent owned by France Telecom and 28.75 percent owned by Egypt’s Orascom Telecom.

Orascom meanwhile retains a direct 20 percent stake in ECMS, while the remaining 29 percent is in free float.

Orascom said on Sunday that an arbitration court had ordered it to sell its 28.75 percent holding to France Telecom at a price equivalent to 273.26 Egyptian pounds ($49) per share.

The order marked the culmination of an undisclosed dispute between Orascom and France Telecom that had been brought before the International Court of Arbitration at the International Chamber of Commerce back in 2007.

Orascom Telecom's chairman said on Tuesday that OT would prefer to retain its stake in Mobinil after a court ruled that it should sell its shares to France Telecom, a partner in the Egyptian mobile firm.

"A favourable outcome for me is continuing business as usual and forgetting about the arbitration. We have no desire to leave, but they need to apologise," Naguib Sawiris told Reuters.

France Telecom meanwhile has indicated it will not be improving its offer.

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