Etisalat walks out of another bid for Zain

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Etisalat rules out another round of bid for Kuwaiti Zain as a Kuwaiti law almost doubles the valuation of shares. The company executives site Kuwaiti capital markets laws as the main cause for scrapping of the deal.

As per Kuwaiti law, the company is required to bid for the remaining outstanding shares if it purchases more than 30 per cent of the listed firm’s shares. This makes the Zain deal costlier by US$20bn.

Zains market capitalisation was around $18bn, but the offer from Etisalat puts it at a higher figure.

According to Jamal Saif al Jarwan, the group chief international investments officer at Etisalat, Zain acquisition was appropriate for Etisalat as there is limited opportunity for expansion in the region. The acquisition would have benefited Etisalat with new synergies in operations.

Other factors for the failure of bid is attributed to the media publicity surrounding the deal and Zain’s divided board. However, the key shareholder Kharafis were keen to sell their holding.

Speaking at the TMT Finance and Investment Middle East conference, Mr Al Jarwan said that there is limited scope for future acquisitions in the region and with the scrapping of Zain deal it is even more difficult. However, Etisalat may consider bidding for some of Zains assets given lack of opportunities for acquisition.

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