Etisalat Seeking Majority Stake in Zain

UAE based Etisalat is reported to have offered US$10.5 billion to take a majority stake in Kuwait based Zain. The deal is reported to be for Zain assets controlled by shareholders who own about 46 percent of the company, including operations in Saudi Arabia. As some 10 percent of Zain shares are held as treasury stock, the 46% holding would give Etisalat effective control of the company.

The National Bank of Kuwait, the country's biggest lender, is brokering the deal, two people familiar with the matter told Bloomberg News.

A purchase would extend Etisalat's reach in the Middle East, where Zain operates in countries from Kuwait and Iraq to Bahrain, plus a couple of networks left in Africa after it sold most of its African assets to Bharti Airtel earlier this year.

"Etisalat has submitted a preliminary conditional offer to buy a stake in Zain," Ahmed bin Ali, Etisalat Group senior vice president said in an e-mailed statement. "Concluding this offer depends on the fulfillment of certain requirements and conditions necessary to finalize the deal."

Only a couple of months ago though, Etisalat denied that it is had submitted either a proposal or formal bid to take a stake in Zain. There had been reports in the middle of June that the two companies have been in talks over a majority stake sale.

A bid by Etisalat for control of Zain would also probably kill off its apparently ongoing talks to take a 26% stake in India's Reliance Communications.