Etisalat drops bid for Zain stake
21 Mar 2011
UAE telecommunications company Etisalat has dropped its $12-billion bid for a large chunk of Kuwaiti rival Zain, thus calling off an effort to significantly extend its reach across the Middle East.
The company, officially known as the Emirates Telecommunications Corp, cited several reasons for scrapping the deal.
In a statement to the Abu Dhabi stock exchange on Sunday, the company listed the results of its due diligence process, a lack of unanimity among Zain board members and political unrest in the region as reasons for scrapping the deal.
According to analysts, the setback would be quite disappointing to Etisalat as one of the key plans of its strategy was to try to increase international revenues. They say if Etisalat had got Zain, it would have represented a big boost to its regional and international portfolio.
The telco first announced its bid for the acquisition of 46 per cent of Zain in September.
The company signed a preliminary agreement with a major Zain shareholder, the Al-Khair National Stocks and Real Estate Co, to flag off the due diligence process of going through Zain's books. The company said at the time its offer was binding but subject to certain conditions.
The Kharafi Group, a Kuwait-based family conglomerate owns Al-Khair. The group holds the largest Zain stake outside the government.
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