Oman Telecommunications Company (Omantel) has won a bid to acquire 425.7 million treasury shares of Mobile Telecommunications Company (Zain), which represent 9.84 per cent at an offer price of 0.600 Kuwait dinar. The acquisition was for a total cash consideration of OMR325.6 million ($846.1 million), according to a press release. This announcement was made after an auction process managed by the Boursa Kuwait.
Zain and Omantel entered into a share purchase agreement (SPA) on August 10 for acquiring Zain’s treasury shares by the latter. This announcement triggered a formal block trade auction process under Boursa Kuwait rules, which completed on Thursday and culminated in a ceremony hosted by Boursa Kuwait to mark the successful closing of the transaction. The ceremony was held in the presence of the Zain Vice-Chairman and Group chief executive officer, Bader Nasser Al Kharafi; chief executive officer of Omantel, Talal Said Al Mamari; and chief executive officer of Boursa Kuwait, Khaled Al Khaled.
“We appreciate the professionalism and efforts of Boursa Kuwait and Omantel in this transaction, reflecting the confidence and strength of both the Kuwait equity market and in Zain’s business and digital growth strateg,” said Al Kharafi.
“We welcome Omantel’s investment in Zain, and we look forward to exploring mutually beneficial synergies and business enhancing opportunities across the region. The liquidity from this transaction brings many immediate and significant benefits to Zain as it enhances our financial flexibility as we continue to seek opportunities in the digital space and invest in upgrading our modern networks to enhance the mobile experience for our customers. Additionally, the deal allows us to reduce our debt levels as well as increasing our shareholders’ equity.”
“The global telecoms market is changing fast, and our region has not escaped this trend. Data and content is where growth lies and investing in innovative digital products is critical to building a stronger company,” said Al Mamari.
“In this competitive environment, our acquisition of a minority stake in Zain Group is a strategic move for Omantel as we continue to deliver against our Corporate Strategy 3.0, create value for shareholders, diversify our revenue, raise our regional profile, and mitigate the risk of operating in a single market. Omantel is the incumbent player in Oman, with expertise in fixed, mobile and broadband networks and wholesale operations. We have long admired Zain for their deep digital expertise and regional footprint which is highly complementary to ours. Building on our respective strengths, we believe that together we can accelerate collaboration and innovation to ultimately deliver better services and content for our customers in Oman and the region, now and for the future.”
“We congratulate the parties involved in this major investment that was completed on Boursa Kuwait in such a short period of time. Boursa Kuwait’s expertise in managing the auction was key to ensure a smooth, transparent and swift process. Today, this deal stands as an important indicator of the growing trust and confidence investors have in the Kuwait market. Boursa Kuwait will continue to develop the operations of this exchange in line with its three main pillars of efficiency, transparency and accessibility,” added Al Khaled.
The sale of treasury shares of Zain was approved by its shareholders and the Capital Markets Authority of Kuwait earlier this year and the current transaction has been approved by the Board of Directors of both Zain and Omantel.
The sale will now be executed and the treasury shares converted into common stock. Following this conversion, Omantel will hold 9.84 per cent of Zain Group, with the corresponding voting rights and dividends attached to common stock.
The transaction will be fully debt financed by Omantel. Citigroup Global Markets Limited served as exclusive financial advisor and Meysan Partners as legal advisor to Zain. Credit Suisse acted as exclusive financial adviser and Freshfields Bruckhaus Deringer LLP as legal adviser to Omantel.