Progress at last for SFR's and Zain's sale plans
Vivendi offers £6bn, but no premium, to buy out Vodafone; Zain removes hurdle for Etisalat takeover
Published: 14 March, 2011
READ MORE: M&A | Africa & Middle East | France | Zain Group | SFR (France)
Two major wireless sales have come a step closer to reality after prolonged discussions - French media group Vivendi is preparing a €6.9bn bid to take full control of the SFR cellco subsidiary, buying out Vodafone; while Kuwait's Zain has provisionally accepted an offer for a 24% stake in its Saudi Arabian arm, which could then end the stalemate over its proposed sale of a major shareholding to Etisalat of the UAE.
One of the factors holding up Etisalat's purchase of a 46% share in Zain has been the need for Zain, first, to offload some of its Saudi activities. Etisalat has its own subsidiary in the country, whose competition laws would not allow it to retain both. Now Zain has accepted an offer from Bahrain's Batelco and from Kingdom Holdings, an investment vehicle of Prince Al-Waleed Bin Talal, to take 24% in MTS Saudi Arabia for $949m.
The deal, if completed, will improve the prospects for Etisalat's $12bn bid to buy almost half of Zain, a proposal that has seen opposition from some major shareholders, which have argued that more value might be obtained from a rival bidder.
Back in France, Vivendi is keen to acquire Vodafone's 44% stake in their SFR joint venture, France's second cellco, but it is not prepared to pay a significant premium. Its offer of £6bn or €6.9bn is well below the sum of $8bn that Vodafone has been targeting. Vivendi CEO Jean-Bernard Lévy has previously said he will not pay a premium for the stake but reports in UK newspaper The Daily Telegraph indicate that Vodafone has increased its valuation on its shareholding. In December it assigned a value of £7bn but is now said to be seeking an additional £1bn, though several analysts think a compromise around £7bn is very achievable, and would fit into Vodafone's strategy of disposing of non-controlling stakes.
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