A lengthy saga has finally come to a close, with Etisalat announcing that it is no longer aiming to purchase a controlling stake in the Kuwaiti firm Zain.
The UAE-based operator has stated that certain factors, including “current political unrest in the region”, have rendered the deal “no longer viable.” Merger & acquisition regulations in Kuwait have also changed – another reason given for the collapse of the deal.
Etisalat first made an offer for a 46% controlling stake in November last year. While the deal received the full support of Zain’s biggest shareholders, the Kharafi family, there was considerable backlash from minority shareholders. The ongoing disputes eventually resulted in the Kharafis announcing that they were no longer backing the deal, which at the time was seen as an indication that Etisalat’s bid was destined to fail.
The key source of resistance to the deal was the fact that Zain would have been required to sell its Saudi Arabian operations, Zain KSA, in order to comply with the Kingdom’s regulatory authorities – Etisalat already has existing operations in Saudi Arabia. However, as recently as last week, it appeared that this issue had been resolved, with the announcement that the Bahraini operator Batelco, together with the public holding company Kingdom Holding, would acquire Zain’s 25% stake in KSA. With the collapse of the Etisalat deal, Zain no longer has cause to sell these assets, so it is not known whether this deal will close.
