Time running out on Zain acquisition by Etisalat

With one day left to go before the due diligence process must end on February 28, the US$12 billion acquisition of Zain Group is looking less and less likely to materialise.

The Kharafi Group, one of the main shareholders in Zain, has already stated it would not accept Etisalat extending its due diligence on Zain beyond the end of this month. Etisalat initially announced submitting a bid for Zain Group at the end of September 2010, and Zain Group board of directors met on November 7 to discuss the request bys a shareholder to approve and allow Etisalat to commence a process of due.

Zain Group also announced a series of job cuts after its share price sank more than seven per cent on concerns that Etisalat’s proposed US$11.7 billion acquisition of the company may not be ratified

Several senior executives are among the 30 to 40 people who will be affected by the cuts.

On February 19, Zain announced that three senior executives, including the chief operating officer, would leave the company.

Zain’s share price slide came after the company rejected offers for its 25 per cent stake in Zain Saudi Arabia from Prince Alwaleed bin Talal bin Abdulaziz Al Saud’s Kingdom Holding, Batelco and a consortium led by Al Riyadh Group.

The failure of the three bids casts doubt on Etisalat’s proposed acquisition of a 46 per cent controlling stake in Zain. A sale of Zain’s stake in the Saudi unit is a precondition of the Etisalat deal.