Zain rejects all three bids for Saudi unit; Etisalat due diligence not extended?

21 Feb 2011

Kuwait-based Zain Group has confirmed that it has rejected all three bids to sell its 25% stake in Zain Saudi Arabia. The respective bids were lodged by Saudi investment vehicle Kingdom Holding Company (KHC), local consortium the Al-Riyadh Group, and Bahrain Telecommunications Company (Batelco). In an announcement made to the Kuwait Stock Exchange (KSE), Al-Khorafi Group, Zain’s leading private investor confirmed: ‘The Zain board of directors unanimously rejected all the bids to buy the 25% stake in Zain Saudi Arabia’, offering no further explanation for the refusals.

The sale of the Saudi Arabian cellco – valued at USD756 million according to current prices – has arisen following UAE-based Emirates Telecommunications Company’s (Etisalat’s) non-binding offer worth around USD12 billion for a 46% stake in Zain Group. Etisalat already owns a controlling stake in Saudi’s second-placed mobile operator Mobily and its broadband unit Bayanat Al-Oula, so any transaction for Zain’s local assets would contravene local anti-monopoly regulations.

In light of the trio of rejected bids, the mooted Etisalat/Zain deal has been cast into doubt by a parallel announcement from Kuwait’s National Investment Company, which represents the Al-Khorafi Group in the proposed sale. The investment firm said that the due diligence date for the Etisalat deal is unlikely to be extended any further, stating: ‘We will not accept to extend the deadline beyond that date’. As previously reported by CommsUpdate, Etisalat confirmed that it had extended the due diligence process for its acquisition of Zain until the end of February. If the acquisition does go ahead as planned, it will make Etisalat the ninth largest telecoms operator in the world in terms of subscribers.

Saudi Arabia, Bahrain Telecommunications Company (Batelco), Etisalat UAE, Zain Group, Zain Saudi Arabia