Doubt cast on Etisalat-Zain deal
Al Kharafi Group no longer committed to the deal as Zain finds new buyer for its KSA operation.
Etisalat's bid to acquire a 46% stake in Zain Group is in doubt after Al Kharafi Group, the Zain shareholder that was spearheading the sale, said it was no longer committed to the deal.
In a posting on the Kuwait Stock Exchange, Al Kharafi Group stated: "Due to the expiration of the grace period until February 28, we announce the end of our commitment with Etisalat to sell a 46% stake in Zain."
Etisalat was originally due to complete due diligence for the deal by mid-January, but gained an extension until February 28.
The UAE telco said earlier this month that it was on track to complete the due diligence and was optimistic that the deal would go through.
However, in a statement released today, Etisalat spokesperson Ahmed bin Ali said that the telco had not yet completed the due diligence. He said Etisalat had finished gathering information, but remained in the process of analysing it. “Consequently the results will be discussed with the sellers in a later stage, and the final results will be presented to Etisala's Board of Directors to make a decision in this regard.”
However, more positive news emerged today with reports that Zain Saudi Arabia had reached an understanding with Saudi Arabian investors interested in buying Zain Group's stake in the firm.
According to a report from Reuters, Prince Hussam bin Saud, Zain Saudi Arabia’s chairman, said: “We are waiting for what's going to happen to the main deal between Zain group and Etisalat, this is progressing in a very unsmooth manner and is facing obstacles."
"We are going to take a different approach with the new offer if we felt that Zain and Etisalat are serious about their deal."
The development is likely to be welcomed by Etisalat, following Zain Group's rejection last month of all three offers it had received from companies willing to buy its stake in Zain Saudi Arabia. Zain Group must sell its stake in its Saudi Arabian unit in order for Etisalat's acquisition of the stake in Zain Group to complete.
Saud said that the agreement had been submitted to the Saudi Arabia’s telecoms regulator, the Communication and Information Technology Commission, and is expected gain approval, the Reuters report added.