JEDDAH: Kingdom Holding Co., controlled by Prince Alwaleed Bin Talal, offered to acquire Mobile Telecommunications Co.'s 25 percent stake in Zain Saudi Arabia. On the basis of 1.4 billion outstanding Zain Saudi shares and a current share price of SR7.45, the 25 percent stake is valued at about SR2.6 billion ($690 million) at the current share price. The sale of the Saudi unit would ease the purchase of a majority stake in Mobile Telecommunications (Zain) by Emirates Telecommunications Corp. (Etisalat). Kingdom Holding's expression of interest is valid until 5 P.M. in Riyadh on Feb. 6, the company said in a statement to the Saudi bourse. "Obviously it's positive," said Irfan Ellam, an analyst at Al Mal Capital PJSC in Dubai. "This could potentially flush out other offers." There was initial surprise the offer wasn't from Bahrain Telecommunications Co. or any another telecommunications company, "which I would have thought to be a more natural fit," Ellam said. "However, Kingdom Holding knows Saudi well and is well connected. Whoever buys it will have to restructure." Zain's shares advanced 2.8 percent to 1,460 fils in Kuwait trading. Kingdom Holding sent Mobile Telecommunications' board "a non-binding offer and a preliminary expression of interest" to buy the stake, the Saudi investment company said in a statement Monday. Zain said it will study the offer, according to a statement to the Kuwait Stock Exchange. Etisalat is in talks to buy a majority stake in Zain and has said Zain needs to sell its stake in the Saudi unit in a "timely fashion" for the deal to proceed. Etisalat is making "good progress" with its due diligence of Zain after missing a Jan. 15 deadline to reach an accord on its $12 billion offer, Abu-Dhabi based Etisalat said Jan. 29. Bahrain Telecommunications (Batelco) said in October it was studying plans to acquire a stake in Zain Saudi Arabia as part of its expansion strategy. Kuwait's Kharafi Group is Zain's second-biggest shareholder with a 12.7 percent stake and is leading the sale of 46 percent of Zain to Etisalat. The Kuwait Investment Authority sovereign- wealth fund owns 24.6 percent. Etisalat announced its offer on Sept. 30. Excluding treasury stock, the holding would amount to 51 percent of share capital and voting rights, according to a preliminary agreement that Etisalat reached in November with Al-Khair National for Stocks and Real Estate Co., owned by Kharafi. Kingdom Holding said it would inform its shareholders, those of Zain and Zain Saudi Arabia "of any further material developments on a timely basis."
