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Mon 7 Mar 2011 05:10 PM

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New Kuwait market bylaws won't apply to agreed deals

UAE Etisalat's $12bn bid for a stake in rival telco Zain to be exempted from new capital market laws related to takeovers

New Kuwait market bylaws won't apply to agreed deals
LAW MATTERS: New Kuwaiti capital market laws related to takeovers will not apply to deals agreed before the rules are published this month (Getty Images)

New Kuwaiti capital market laws related to takeovers will
not apply to deals agreed before the rules are published this month, an
official said on Monday, exempting Etisalat's $12bn bid for a stake in rival
telco Zain.

Kuwait will implement in March its capital markets bylaws
once they are published in the Gulf Arab state's official gazette.

One of the CMA bylaws requires anyone who buys more than
30 percent of a listed Kuwaiti firm to bid for the remaining outstanding shares
within 30 days.

"We have nothing to do with any takeover deal that
happens or is agreed on before the bylaw is published in the official
gazette," CMA official Yousuf Al Ali said.

Etisalat, the Gulf's largest telecoms operator, offered
in September to buy a 46-percent stake in Zain from major shareholder, Kharafi
Group for KD1.7 a share.

The Zain deal would make Etisalat the regional
heavyweight but the deal has been plagued by delays and disputes.

A hostile board and complicated deal structure are among
the hurdles to the deal which Etisalat, facing stiff competition at home from
rival du, badly wants to expand its footprint in the Middle East.

As part of the deal, Etisalat required Zain to sell its
stake in Zain Saudi because it also operates in the kingdom through its
affiliate Mobily.

But Zain's board - seen as hostile to the Kharafi Group
which irritated other shareholders by cutting them out of the stake sale and
accruing all brokerage fees on the deal - has rejected all bids for the
25-percent stake in Zain Saudi.

Meanwhile, National Investments Co, (NIC), the investment
firm owned by Kharafi earlier this month said its binding agreement to sell the
stake to Etisalat was over after the February 28 deadline passed unmet.

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