The UAE's Etisalat is angling to buy a controlling stake in Kuwaiti telco Zain.
Etisalat is in direct talks with shareholders that own a combined 46% of the company over buying their entire stakes, sources toldBloomberg. This would give Etisalat a controlling majority, as about 10% of Zain's shares are held as treasury stock.
The shareholders are thought to include the Kharafi family, who hold nearly a quarter of the company, and other investors associated with them, FT.comsaid.
Etisalat has offered 1.7 Kuwaiti dinars per share. The value of the entire 46% stake has been alternatively reported as $10.5 billion and $12 billion.
In separate statements, Etisalat has confirmed it made a conditional offer while Zain's board said it was not aware of a deal, meaning Etisalat took the deal directly to shareholders.
Etisalat has more than 100 million customers across 18 countries in the Middle East, Africa and Asia. But it derives around 85% of its income from its UAE operations, and wants to reduce its reliance on the increasingly saturated market.
Zain has operations in eight countries in the Middle East, and a customer base of around 34.2 million.
The deal, if it goes through, would be one of the largest ever M&A deals in the Gulf.
Etisalat is rumored to have been negotiating for a stake in Indian operator Reliance Communications, but a deal has so far yet to materialize.
Shares in Zain swelled 7.9% yesterday to 1.36 dinar on the news. Etisalat shares are up 0.93% to 10.75 dirham.
Gulf telecom carriers have spent more than $33 billion on acquisitions since 2006, business analytics firm Dealogic estimates.
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