Etisalat to raise US$ 8 billion for Zain stake buy
Etisalat aims to take control of Zain; combined global footprint to stretch across 24 markets. According to Wireless Intelligence, based on Q3/2010 data, the combined group would have a total customer base of 150 million, or 70 million proportionate connections based on percentage group ownership. Both firms have existing mobile operations across the Middle East, Africa and Asia. However, their respective footprints only overlap in one market – Saudi Arabia – where the Zain unit is expected to be divested in order to secure regulatory clearance.
Zain confirmed that it had invited Etisalat to begin due diligence with a view to acquiring a 46% stake in the Kuwaiti firm. Given that 10% of Zain is held in treasury shares then Etisalat's offer represents 51% of its issued share capital (cf. Smart Insights Weekly #10-45). The two parties have set a deadline of 15 January 2011 to close a deal. For Zain, talks are being led by the Kharafi family, one of its largest shareholders, though some smaller Zain shareholders have already raised objections to a sale, which could delay or even derail the process.