Shareholder agenda looks likely to push Zain into new hands

Zain Group shareholders accounting for 46 per cent of the mobile operator’s stock are reported to have reached a preliminary agreement in a deal rumoured to be worth about US$15 billion. CEO Saad Al Barrak said that the executive management of Zain was not driving the process forward; rather it was being led by shareholders including the family-owned conglomerate the Kharafi Group.

An Asian investor is said to be looking to pay as much as KWD 2 (US$7.10) per share, which would represent a 45 per cent premium to the share price at the end of play September 8.

Kharafi Group holds around 11 per cent of Zain, and is understood to be seeking cash to fund other areas of the business. Earlier reports linking the Zain stake sale to the Abu Dhabi Investment Authority (ADIA) have been denied.

This development follows a decision ratified earlier this month whereby Zain shareholders agreed to cancel articles that limited individual ownership to two percent of the company’s capital and restricted public shareholding companies to holding no more than five percent. This move paved the way for Zain shareholders to offer their stakes to an interested bidder/s.

Should Zain shareholders successfully sell their shares, it would be a situation akin to the 2007 sale of Wataniya Telecom to Qatar Telecom, when 24.9 per cent Wataniya Telecom shareholder KIPCO (Kuwait Projects Company Holding) formed a consortium of shareholders holding a total of 51 per cent of the operator’s capital and sold it to Qtel. Wataniya International CEO at the time, Ahmad Haleem, recalled how he was notified of the deal by KIPCO chairman Faisal Al-Ayyar after the negotiations had already gotten underway.