A competing bid for Zain from the owner of Turkcell has delayed the deadline for Etisalat to buy almost half of its Kuwaiti rival.
Extension likely on Etisalat’s deal to buy Zain stake
The deadline for Etisalat to buy a 46 per cent stake in its rival Zain was headed last night towards a formal extension after uncertainty over the sale of the Kuwaiti telecommunications operator's Saudi Arabian unit.
The expected extension comes after a competing bid for Zain's assets emerged, with Cukurova Holding of Turkey, owner of Turkcell, making a US$7.89 billion (Dh28.98bn) bid for a 29.9 per cent stake.
Etisalat and Zain shareholders were given until midnight last night to sign a "definitive transaction" agreement, under which the UAE company would buy 46 per cent of the Kuwaiti operator for 1.70 dinars a share.
The deal would ultimately give Etisalat a 51 per cent stake of the company worth 3.36bn Kuwaiti dinars (Dh43.84bn) and make the UAE operator the largest Middle Eastern telecoms firm, with about 146 million subscribers.
In October, Kharafi Group, one of the largest private shareholders in Zain, said it had enough approvals from shareholders to accept Etisalat's bid. But the deal is dependent on the sale of Zain's assets in Saudi Arabia, since Etisalat already has a stake in Mobily, a competing mobile operator in the kingdom.
Irfan Ellam, a telecoms analyst with Al Mal Capital, said that Etisalat could extend its deadline to strike an agreement with Zain shareholders to the end of the month or longer while it decides what to do with the Saudi Arabian unit.
"It was very ambitious to finish everything in three months," Mr Ellam said
"In three months, a lot could happen, but it didn't clear up the Saudi Arabian issue and there's no clarity on that from either Zain or the [Communication and Information Technology Commission]."
Mr Ellam said that the Cukurova bid may not be taken seriously by Zain's shareholders after the competing offer was disclosed but not posted on the Kuwait stock exchange.