Kuwait/Dubai: Etisalat's $12 billion (Dh44.07 billion) bid for a stake in Zain is in jeopardy after the Kuwaiti telecoms firm failed to meet a key condition and a major shareholder refused to allow more time for the deal.
Yesterday Zain rejected all bids for the sale of its stake in its Saudi operations, a key regulatory requirement for the etisalat deal to go through.
Etisalat, keen to expand outside its home market after losing its monopoly in 2007, had offered to buy a 46 per cent stake in Zain last September from major shareholder Kharafi Group, a family-run conglomerate.
Plagued
But the deal has been plagued by delays, including a lawsuit from unhappy Zain shareholders, and etisalat has twice extended a self-imposed January 15 deadline to finish due diligence. Now it said it aims to complete it by the end of February.
"There's now a low probability the Zain-etisalat deal will go through, which will leave Kharafi back at square one and looking for another buyer," said a regional telecoms analyst who asked not to be identified.
Zain received three bids for the stake from Saudi billionaire Prince Al Waleed Bin Talal's Kingdom Holding, Bahrain Telecommunications and an investment consortium led by Al Riyadh Group.
Reasonable
Prince Al Waleed said Kingdom's offer was "a reasonable one" yesterday and the investment firm had decided to stick to its original bid and not revise it. Zain also said yesterday it planned to cut 40 per cent of its staff and reorganise its senior management structure.
Chief executive Nabeel Bin Salama said the reductions would only apply to the parent group and not to its subsidiaries.
"My strategy is to restructure and decrease the number in the Group as much as possible in order to receive the preferred benefits," he said at press conference.
