Egyptian court upholds block on FT’s MobiNil stake offer

12 Apr 2010

The long-running battle for control of Egyptian mobile network operator Egyptian Company for Mobile Services (MobiNil) looks set to continue in light of a decision by a local court upholding a block on a buyout by France Telecom (FT), Reuters reports. Overseeing the case Judge Hamdi Yassan ruled that the terms of the French company’s offer were unfair to minority shareholders; FT had offered EGP245 (USD44.4) per share. ‘The EGP28 difference in the price offer violates principles of equality in opportunity for shareholders. Selling at this price is not fair for minority shareholders,’ the judge noted. In addition, Yassan said that the ruling had taken into account the manner in which the regulatory approval had been granted for the bid, stating: ‘The case in front of the court is not a decision on whether the price offer was just but rather whether the regulator’s decision was reached correctly.’

The latest decision follows a ruling made in January 2010 by the court which blocked regulatory approval for the FT bid that had been granted by the Egyptian Financial Supervisory Authority (EFSA) in December 2009. Commenting on the latest development Osman Mowafi, Orascom’s lawyer, noted: ‘This decision is a big victory for Orascom and it will ensure that we continue to provide quality services to the Egyptian telecom market.’ FT has yet to comment on the ruling, but the European telecoms giant does have 60 days in which to appeal.

According to TeleGeography’s GlobalComms Database, the matter stems from an International Court of Arbitration of the International Chamber of Commerce (ICC) decision in April 2009 that ordered Orascom to sell its stake in MobiNil Telecom, the holding company that controls 51% of MobiNil. Subsequently, FT revealed it had voluntarily filed a proposal to offer MobiNil’s minority shareholders a public takeover bid, but Orascom claimed that under Egyptian law FT must also purchase its 20% direct stake in the cellco at a price of EGP273.26 per share, a claim rejected by FT, which argued that the tender for direct shares was not covered by the arbitration ruling.