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Etisalat to start due diligence for Zain deal

Decision whether to progress will depend on extensive due diligence - Mohammed Omran

Etisalat to start due diligence for Zain deal
Mohammed Omran, chairman, Etisalat, said the proposed acquisition of Zain Group will depend on findings of a due diligence process.

Etisalat is continuing to work on its planned acquisition of Kuwait's Zain Group, but the deal will only be concluded following the results of a due diligence process that is yet to start, according to Mohammed Omran, chairman, Etisalat.

"As stated we have previously made a preliminary proposal," Omran said. "We are still at an early stage.  The due diligence process has yet to start.  We will not conclude a transaction until the final results of the due diligence are considered by our board.  This will take a number of weeks."

However, the company is confident that it will be able to "obtain all necessary regulatory approvals" to complete the deal, including a solution to the overlapping operations of Etisalat and Zain in Saudi Arabia, Omran said.

He added that the company has also received "several attractive proposals" from banks that would enable Etisalat to finance the acquisition.

"We are confident that Etisalat can obtain the required funding in order to finance the transaction on favourable terms," Omran said.

Etisalat's shareholders can also expect to receive dividend payments, according to Omran. "According to our preliminary analysis there should not be any negative impact on the dividend payment.  We do not want to jeopardise the dividend payment by acquiring Zain," he said.

While some industry analysts have suggested that the KD 1.7 ($6) per share offer price that Etisalat is reported to have made for Zain is too high, Omran said that he believes the deal "represents great value" for Etisalat's shareholders. However, he added that Etisalat's decision on whether to proceed with the deal would depend on confirming this through the due diligence. "We will not proceed unless such valuation is confirmed," Omran said.

Omran also confirmed that the general reaction to the proposed deal in Kuwait "has been very positive" despite opposition from some shareholders.

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