Head of Kharafi Group says Etisalat offer is 'suitable and good for both parties'.
Emirates Telecommunications Corp's offer to buy the Kharafi Group's stake in Zain is "suitable and good for both parties," the head of the Kharafi Group said in a Kuwaiti newspaper on Thursday.
The UAE-based telco, which is known as Etisalat, said a day earlier that it had made a conditional offer for a 46 percent stake in Zain.
The offer of 1.7 dinars ($5.97) a share, valuing the stake at nearly $12 billion, was put forward to the Kharafi Group, a major Zain shareholder and other undisclosed shareholders.
The Kharafi Group has been keen to offload its position for more than a year to raise liquidity.
In an interview with Arabic language daily al-Qabas, Nasser al Kharafi welcomed the offer and said minority shareholders, who fear they would be cut out of any deal between a large stakeholder and a bidder, would be protected.
Kharafi also said the closing date of the deal would be set when the contract is officially signed.
An industry source told Reuters in August Etisalat had signed a non-disclosure agreement with Zain to study its assets.
Kuwaiti family conglomerate Kharafi owns a 12.7 percent stake in Zain through one of its units, according to bourse data, but analysts estimate Kharafi's stake to be around 20 percent through other firms it controls. The Kuwaiti government owns 24.6 percent in the company.
Shares in both Etisalat and Zain were halted on Thursday on their respective bourses, pending clarification of the details of the offer.
Etisalat, the Gulf Arab region's second-biggest telecoms firm, has been keen to expand outside its home market as competition heats up for the one-time monopoly. Zain, which sold its African assets earlier this year, operates in high growth Middle Eastern markets like Iraq and Lebanon, among others.
Analysts have said the offer is a hefty premium but to be expected for the heavily-sought emerging market telco plays.
Last week, France Telecom paid $840 million for a 40 percent stake in Moroccan telecoms operator Meditel.
"France Telecom ... put a floor for acquisitions in the region," said Rami Sidani, head of investment at Schroders Middle East in Dubai.
"Etisalat is sitting on $1.6 billion in cash as shown in its balance sheet. I expect a combination of equity and debt so we will hear about a rights issue very soon to finance this deal."
The UAE government owns a 60 percent stake in Etisalat.
The offer is subject to conditions, which may result in the disposal of Zain's telecoms unit in Saudi Arabia where Etisalat is also present.
Kuwaiti newspaper al Jarida, citing informed sources, said that Etisalat intended to sell Zain Saudi after the deal closed. (Reuters)For all the latest UAE news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.