Etisalat offers $5.97 a share for 51% Zain stake

Emirates Telecommunications Corporation, popularly known as etisalat, has submitted a conditional offer of $5.97 per share to buy 51 per cent stake in Kuwait’s telecommunication firm Zain.

“The due diligence process will start in weeks,” said Mohammed Hasan Omran, Chairman of etisalat, said in a statement on Wednesday. The transaction is likely to be closed by the first quarter of 2011, he added.

The statement comes as, the Khorafi Group, the leading private shareholder in Zain, on Wednesday morning informed the Kuwait Stock Exchange of signing a preliminary agreement to sell its 46-per cent stake in the company to etisalat. In late September, etisalat had made a preliminary offer to leading investors in Zain to purchase a controlling stake in the company in a deal estimated to cost well above $10 billion.

“In addition, our proposal will terminate unless the parties have entered into definitive transaction documents by 15 January 2011,” the etisalat chairman said. Omran said that preliminary studies indicate that Etisalat-Zain deal provides excellent integration into his company’s operations. He said that Zain’s geographic presence in the markets of Sudan, Iraq, Kuwait, Jordan, Bahrain, Lebanon and Morocco, will complement etisalat’s growing business. “Etisalat’s strategy is expansion into regional and international growth markets will offer great opportunities to increase and diversify our sources of revenue,” he said and adding that the deal will provide positive returns to etisalat and added value to its shareholders.

He noted that the telecommunications sector is a dynamic, fast developing one, which usually exceeds growth forecasts and expectations. “We must therefore keep pace with these developments to maintain our leading position,” the chairman said. The Khorafi Group directly owns 12.7 per cent of Zain, but its share is believed amount to more than 20 per cent if indirect stakes are taken into account.

“Al Khorafi Group is highly reputable conglomerate, which is considered to be an important pillar of the economy. They command our total respect. We have worked with them with absolute transparency and clarity and they have been very reasonable and cooperative,” the chairman said.