Text size:

  • Small
  • Normal
  • Large

Etisalat warned on procedure for acquiring control of Zain

The Securities Group warns Etisalat its procedure for acquiring a majority control of Zain violates Kuwait's share-transfer laws.

A Kuwaiti investment company has warned that Etisalat’s procedure for acquiring majority control of Zain may violate Kuwait’s share-transfer laws.

In an advertisement in Al-Qabas newspaper yesterday taken out by The Securities Group, an investment company in Kuwait that manages about US$ 2billion (Dh7.34bn) of assets, the company advised that the gathering of the stake for Etisalat should be carried out by a “neutral” company associated with the Kuwaiti bourse.

The company appears to be objecting to the Kharafi Group’s role in managing the transfer of shares to Etisalat.

Etisalat has offered to buy a 46 per cent stake in Zain for 1.7 Kuwaiti dinars per share, a total of about $10.5bn, in a deal that would make the UAE telecommunications operator one of the largest in the world.

Minority shareholders have yet to approve the deal and the Kharafi Group, one of the largest private investors in Zain, is still working to acquire the shares in the company that Etisalat needs to reach the 46 per cent stake it is seeking.

“There’s not really any issue with the Zain shares as a company per se,” said Salem al Ali, the executive vice president for finance at the Securities Group.

“But the deal should be handled by the exchange commission to assure the integrity of the transaction and the shares that [are] converted to cash [are] being custodised by a neutral party.”

Mr al Ali cited a Kuwaiti law requiring that any transaction worth more than 30 per cent of a listed company must be handled by a company associated with the Kuwaiti bourse and that any offer should be placed on the open market for further analysis by shareholders. “If you don’t follow this law you are in breach,” Mr al Ali said.

“That creates a problem in itself that you’re not following the right procedures. If you want to enter the Kuwaiti market through a purchase of a listed company, this is how it should be done.”

Mr al Ali declined to say how much of Zain his company was managing for its clients but said the law applied to the approximately 22 per cent of Zain that was owned by the private sector.

“It should be done in an open market bid. One cannot expect a single party to take a lead and go to every single shareholder,” Mr al Ali said.

“The methodology, the way it is governed by the law, is quite different. All we are asking for is that you might have misunderstood how the law is enacted.”

Representatives from Etisalat, Zain and the Kharafi Group declined to comment. Officials from the Kuwait Stock Exchange could not be reached.

The deal, however, received the endorsement of Bader al Saad, the general manager of the Kuwait Investment Authority, the country’s sovereign wealth fund.

Mr al Saad, whose fund owns about 24.6 per cent of Zain, told Al Arabiya television the sale would benefit the Kuwaiti bourse and the country’s economy.


Back to the top

More articles

Editor's Picks

 The Greens, villas: Q1 no change. 3BR - Dh210-250,000. 4BR - Dh210-260,000. 5BR - Dh220-300,000. Q1 2013-Q1 2014 5% rise. Pawan Singh / The National

In pictures: Where Dubai rents have risen and fallen, Q1 2014

Find out how rental prices in the prime locations in Dubai have altered during the first three months of the year and the current rates you will pay according to data provided by Asteco.

 Above, the private pool of Ocean Heights' five-bedroom penthouse flat. Courtesy Christie’s International Real Estate

In pictures: Penthouse flat is height of Dubai luxury living

A five-bedroom penthouse in Ocean Heights in Dubai Marina is on sale for Dh25 million and comes with a private pool and an unparalleled view of Dubai.

 The cooling towers of the Temelin nuclear power plant near the Tyn nad Vltavou in Czech Republic. The country wants to continue expanding nuclear energy capacity despite cancelling a tender to build two new units. David W Cerny / Reuters

In pictures: Best business images for the week to April 17, 2014

Here are some of the best business images for the week to April 17, 2014.

 Three generations of the Hakimi family tend to their stall Crawford Market in Mumbai. Subhash Sharma for The National

In pictures: Shopper’s delight at Crawford Market in Mumbai

Crawford Market is an old British-style covered market dealing in just about every kind of fresh food and domestic animal imaginable. Later on renamed Mahatma Jotirao Phule, the market remains popular among locals and visitors by its old name, taken from Arthur Crawford who was the first municipal commissioner of the city.

 The Wind, Energy, Technology and Environment Exhibition takes place from April 14 to April 16. Above, the Dewa showroom during last year’s Wetex. Jaime Puebla / The National

April corporate and economic calendar for the UAE and overseas

From Cityscape to Wetex to stock-market holidays to nations reporting first-quarter GDP figures, here is our helpful calendar of April's business events in the UAE and internationally.

 Get the latest information on credit cards, bank accounts and loan products in the UAE. Mark Lennihan / AP Photo

Rates report: Latest on UAE loans, accounts and credit cards

Souqamal.com brings you the latest interest rates on banking products in the UAE.


To add your event to The National listings, click here

Get the most from The National