KUWAIT CITY: Kuwait's Zain telecom said Monday it has agreed to open its books for due diligence to UAE operator Etisalat which has offered to buy a controlling stake in the firm worth around $12 billion. The move follows a formal request by Al-Khorafi Group, the largest private shareholder in Zain, said a statement posted on Zain's website after a lengthy meeting by the board of directors Sunday. “Following the meeting, the Zain board announced that it had formally accepted the (Al-Khorafi) request to permit Etisalat to commence this process,” added the statement, which was also posted on Kuwait bourse website. “Furthermore, Zain's executive management will fully cooperate with Etisalat in completing all the necessary procedures of the due diligence, while at the same time ensuring the preservation of the company and shareholder interests,” it said. “It is important to note that one of the conditions for completing the transaction is the sale of Zain Group's stake in its mobile operation in the Kingdom of Saudi Arabia,” the statement said. Etisalat, based in the United Arab Emirates (UAE) and the biggest telecoms provider in the region by market value, said Wednesday it had signed a preliminary agreement with Khorafi Group to buy 51 percent of Zain shares traded on the Kuwait Stock Exchange at 1.7 dinars ($6.1) per share. Conditions it listed include the completion of satisfactory due diligence, obtaining all applicable regulatory approvals and that there should be no material adverse change in Zain's business, financial or regulatory affairs. Due diligence and the other work required to reach definitive agreements would take a number of weeks, while the transaction is unlikely to close before the end of the first quarter of 2011, Etisalat said. Khorafi Group is estimated to own around 20 percent of Zain and will need to collect shares from other holders to make up the deal. National Investment Co., Khorafi Group representative, published advertisements in Kuwaiti dailies Monday inviting small investors to participate in the sale. The company said it will commence the process Wednesday through Kuwait Clearance Co. which will collect shares from an estimated 19,000 small investors to be ready for the sale. The process ends on Nov. 30. In its statement Wednesday, Etisalat said that its purchase proposal will terminate unless the parties have entered into “definitive transaction documents” by Jan. 15. Etisalat Chairman Mohammed Omran has described the acquisition as strategic, taking into consideration the geographic footprint of Zain which operates in Sudan, Iraq, Kuwait, Jordan, Bahrain, Lebanon and Morocco. Earlier this year, Zain sold its operations in 15 African countries to Indian telecoms giant Bharti Airtel for $10.7 billion at a profit of more than $3 billion. Kuwait's government holds a 24.6 percent stake in Zain. The other two Kuwaiti mobile companies, Wataniya and Viva, are run by Qatar's Qtel and Saudi STC. – Agence France
