Batelco and Kingdom Holding combine bid for Zain Saudi Arabia

13 March 2011

Bidders come together for a tight-scheduled offer

Riyadh-based Kingdom Holding Company and Bahrain Telecom (Batelco) have launched a joint bid for Zain’s 25 per cent stake in its Saudi Arabian unit. The Kuwaiti telecoms operator rejected separate bids from both companies in February.

After a meeting held on Sunday 13 March in Bahrain, Batelco agreed to become the telecom operator in the revised bid.

“Should our offer be met with acceptance from Zain Group, Kingdom Holding looks forward to leading the due diligence phase and negotiating the terms and conditions of the final binding agreement between all parties,” says Ahmed Halawani, executive director of Kingdom Holding.

The two were among three bidders for the stake, which must be sold before UAE-based Etisalat can acquire Zain Group’s assets in a deal worth $12bn. Etisalat already has operations in Saudi Arabia through its mobile brand Mobily.

Batelco owns a 15 per cent stake in Saudi Atheeb, a fixed-line operator in the country. “Batelco has the telecoms experience and Kingdom Holding knows the Saudi market, the investors and banks. It is a good partnership, but it is hard to say whether Zain will accept it, given that a price has not been disclosed,” says Irfan Ellam, equity research analyst at UAE investment bank Al-Mal Capital.

Neither company stated the amount offered, but the stake has previously been valued at $750m. The offer will be valid until 14 March.

“The time limit is strange, one assumes they’re pressuring Zain as there is no commercial logic for such a tight time frame, or alternatively the transaction in principle and the deal price have already been agreed with Zain and this is a rubber-stamping exercise to make the offer formal,” says Ellam.

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