Alwaleed may pave way for Etisalat's $12-bn Zain bid

Prince Alwaleed bin Talal’s bid to join with a partner to buy Zain’s holding in its Saudi unit may clear the way for Etisalat’s $12 billion offer for a majority stake in Kuwait’s biggest phone operator.

Kingdom Holding, controlled by Saudi Prince Alwaleed, and Bahrain Telecommunications offered $950 million for the 25 per cent stake held by Zain, as Mobile Telecommunication is known, in Zain Saudi Arabia, the partners said today in a statement. The non-binding offer doesn’t include the $3.8 billion of Zain Saudi’s debt and has received preliminary acceptance by the board of Zain Kuwait, the statement said.

“The bid will lead to increased optimism of a deal finally happening between Etisalat and Zain,” said Julian Bruce, director of equity sales at EFG-Hermes Holding in Dubai.

Emirates Telecommunications, or Etisalat, last month missed a second deadline in its attempt to acquire a majority stake in Zain. Abu Dhabi-based Etisalat said on March 2 it is still interested in buying a majority holding. The purchase had been contingent on a timely sale of Zain’s stake in its Saudi unit.

Zain’s second-biggest shareholder, Al-Khair National for Stocks & Real Estate, which is owned by Kuwait’s Kharafi Group, was leading discussions with Etisalat on its bid for Zain. Etisalat declined to comment today on the status of talks.

Kingdom Holding and Bahrain Telecommunications, the Persian Gulf state’s biggest phone company known as Batelco, expect to submit a binding offer by mid-May, subject to successful completion of due diligence, Batelco CEO Peter George Kaliaropoulos said in the statement today. Due diligence could take at least six weeks.

“The combination of Batelco and Kingdom offers the best of both worlds, operating experience combined with influence and track record in KSA,” Bruce said.

Zain Saudi jumped to the highest price in almost a month, surging 6.3 per cent to 7.60 riyals. Kingdom rose 2.2 per cent to 9.50 riyals, the highest since February 16.