By Fiona MacDonald and Tamara Walid - Sep 29, 2011 1:53 PM GMT+0700
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Kingdom and Bahrain Telecom, known as Batelco, had agreed in principle to pay $950 million in cash for the stake in Zain Saudi, controlled by Mobile Telecommunications Co., known as Zain Group. Photographer: Phil Weymouth/Bloomberg
Kingdom Holding Co. (KINGDOM) and Bahrain Telecom Co. (BATELCO) abandoned a plan to buy 25 percent in Zain Saudi Arabia, the kingdom’s third-largest mobile-phone company by market value, for $950 million from Kuwait’s Zain Group.
Kingdom, controlled by Saudi billionaire Prince Alwaleed bin Talal, and Bahrain Telecom “concluded that the terms and conditions as set out in its non-binding offer could not be met to its satisfaction,” they said in separate statements today. “This follows a period of due diligence and discussions with Zain Group and other stakeholders.”
Kingdom and Bahrain Telecom, known as Batelco, had agreed in principle to pay $950 million in cash for the stake in Zain Saudi, controlled by Mobile Telecommunications Co., known as Zain Group. In addition, Zain Saudi would have paid $250 million of debt to Zain Group after the transfer of ownership, Zain Group said on March 16.
“This comes as a surprise as we were waiting for the final agreement,” Amr El-Alfi, deputy director of research at CI Capital, said in a phone interview today from Egypt. “It’s not the first deal that falls through for the Kuwaiti company.”
Emirates Telecommunications Corp., the United Arab Emirates operator knowns as Etisalat, in March abandoned plans to buy a majority stake in Zain Group for about $12 billion. Zain sold most of its African assets last year to Indian billionaire Sunil Mittal’s Bharti Airtel Ltd. for $9 billion.
Shares Fall
Zain Group shares fell 3.1 percent, poised for the biggest decline since May 15, to 940 fils at 9:35 a.m. in Kuwait City. The stock has tumbled 38 percent this year compared with a 16 percent drop in Kuwait’s benchmark stock index.
A Kuwaiti lower court on Sept. 25 annulled all decisions taken by the board of Zain Group, a lawyer for a former board member said. The ruling followed a lawsuit filed by former board member Sheikh Khalifa Ali Al-Sabah based on a report by the commerce ministry, which cited “violations” that took place during a general assembly meeting, the lawyer, Rashed al-Radaan, said.
Zain said the ruling will have no impact on its commitments and the company will appeal against it.
Zain Saudi said its second-quarter loss narrowed as the company added customers. It concluded refinancing 2.25 billion riyals ($600 million) of debt in April.
To contact the reporters on this story: Fiona MacDonald in Kuwait at fmacdonald4@bloomberg.net; Tamara Walid in Abu Dhabi at twalid@bloomberg.net
To contact the editor responsible for this story: Shaji Mathew at shajimathew@bloomberg.net
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