Etisalat said to offer $10.5 bn for Zain stake

Emirates Telecommunications Corp known as Etisalat, is offering about $10.5 billion for a majority stake in Zain, Kuwait’s largest mobile-phone company, two people familiar with the discussions said.

The bid is for all Zain assets controlled by shareholders who own about 46 per cent of the company, including operations in Saudi Arabia, one of the people said, declining to be named because the talks are private. Zain shareholders who are leading the stake-sale plan to accept the Etisalat offer, the person said. About 10 per cent of Zain’s shares are held as treasury stock, which would give Etisalat a controlling majority.

Etisalat said today it made a “conditional offer” for a stake in Zain, as Mobile Telecommunications Co is known. A purchase would extend Etisalat’s reach in West Asia, where Zain operates in countries from Kuwait and Iraq to Bahrain after selling most of its African assets this year to Indian billionaire Sunil Mittal’s Bharti Airtel Ltd for $9 billion.

“This makes (Etisalat) the strongest telecom company in the region,” said Mohammed Ali Yasin, chief investment officer at CAPM Investments in Abu Dhabi. “I believe long-term this really is added value for Etisalat.”

Etisalat is offering 1,700 fils a share for the Zain stake, one of the people said. That’s 25 per cent more than its closing stock price of 1,360, after it rose 7.9 per cent today. Etisalat shares added 0.9 per cent to 10.8 dirhams today before the statement was released.